The sharing economy has been a transformative force for a variety of industries. Changes have been most apparent in the transportation and hospitality industries due to the disruption brought about by Uber and Airbnb – the poster children of the sharing economy.
Both companies have become giants in their respective spaces despite not really owning the assets traditionally needed in their industries. Uber doesn’t really own the cars being ridden by its users. Airbnb doesn’t own the real estate in which its users stay. All of this has been made possible by peers who willingly lend their own assets out in exchange for access to a wide pool of potential customers.
Uber has recently been reported to be considering an initial public offering (IPO) by next year. For the avid non-whale investor, this should be most welcome news. The sharing economy model has generated quite the excitement. Many startups have tried to bring the same disruption to other industries. It’s common to read and hear about this industry being “Uberified” or that startup as being the “Uber of X.”
IPOs are typically the only way ordinary investors get the chance to have stakes in these companies. However, more adventurous investors actually already have “ins” to the sharing economy startups through blockchains and initial coin offerings (ICOs). Blockchain is yet another technology that has been changing markets and it has already found its way into the sharing economy.
A number of projects seek to be the blockchain-based version of existing sharing economy services. BeeToken and SnagRide are trying to be blockchain’s Airbnb and Uber respectively. Aworker provides another recruitment platform where freelancers and gig workers could connect with employers. ShareRing plans to aggregate all sharing activities under one platform, potentially streamlining transactions for the sharing economy. KeepGo seeks to make mobile and cellular data shareable even across carriers.
“With blockchain, not only is the growth and scalability of sharing businesses in our own backyard destined to accelerate, but the mass benefits brought about through its utilization for users worldwide, cannot be overstated,” tells me Tim Bos, CEO at ShareRing.
Tech Brings Efficiency
Technology has spoiled consumers. They now demand speedy services and fulfillment from businesses. This has been a reason why Amazon Prime has been a hit with shoppers with its same-day and 1-day shipping. Over 100 million Prime subscribers have been more than willing to pay a yearly fee in order to receive orders quickly. The explosion of smartphones and mobile connectivity has further stoked this need for instant gratification.
The sharing economy is poised to meet this need for speed. It utilizes the presence and availability of peers within the same locality enabling customers to get in touch with nearby service providers quickly. GPS and geolocation have also helped. Customers can now know how far along their deliveries or rides are. Uber drivers don’t even need to be as knowledgeable about roads anymore. Compared to London cab drivers who have to pass the Knowledge test, drivers now have Waze and Google Maps to navigate for them.
Superior Customer Experiences
These efficiencies also translate into superior customer experiences and give the sharing economy a key advantage over traditional service providers. A survey by PwC showed that 73% of customers rank experience as a key factor in their purchase decisions alongside price and product quality. Yet, for customers, only less than half of businesses are seen to provide excellent service.
Thanks to the sharing economy, customers now have options. Ride sharing services have helped commuters avoid discrimination by taxi drivers. Drivers even have come up with various gimmicks such as offering free treats and even all manners of entertainment just to wow their customers. Short-term lodging has provided travelers with affordable, clean, and homey accommodations – a stark contrast to the questionable service provided by roadside motels or cheap hotels. Peers can also provide more personalized services.
Superior customer experiences that these services provide have already chipped away at the dominance of traditional companies. New York taxi driver medallions, which gave drivers the right to operate their own cabs, have dropped in value significantly since ride sharing entered the scene.
The disruption brought about by the sharing economy doesn’t stop there. Blockchain-based ventures are leveraging new mechanisms to facilitate transactions. The transparency, automation, and decentralization that blockchain brings put sharing economy platforms closer to letting peers transact with each other directly with no intermediaries. Since blockchain also relies on a distributed and decentralized architecture, its underlying infrastructure grows as more people adopt the technology.
“We are talking about a total disruption, coming out of an idea that anyone should be and can be a virtual telecom operator, everyone exercise their right to ownership of what they buy. The traffic you pay for is yours,” shares Guy Zbarsky, CEO at KeepGo.
These services are also maximizing blockchain’s full capabilities. The use of smart contracts and crypto tokens in hiring platforms like Aworker helps guarantee payments and fulfillment between transacting parties. This further brings both convenience and trust into the experience.
Among the growing criticisms against centralized services like Uber and Airbnb is how they still act as intermediaries in supposedly peer-to-peer transactions. Participants on these platforms still have no choice but follow all terms and conditions set by these companies. These companies also heavily influenced or dictate prices.
In decentralized platforms like the ones BeeToken provide, participants are free to price their offerings accordingly. SnagRide even uses artificial intelligence to optimize ride costs. The decentralization that blockchain also brings help create a fair marketplace where providers and customers enjoy a win-win situation.
Due Diligence Still Required
Sharing economy platforms are bringing about disruption in various industries. As the growth of pioneering platforms have shown, consumers’ attitudes are shifting. These new mechanisms might soon be the default way of doing things.
For investors, these only serve as promising indicators to buy in now. The entry of new startups are encouraging as well. Competition breeds innovation so there will still be plenty of opportunities to spot possible unicorns in the making.
Besides, the first popular effort isn’t usually the most successful in the tech sector. Those that have improved the model and have proven sustainability are usually the ones that succeed. As with any investing opportunity, it pays to perform due diligence and examine these startups’ fundamentals.
Still, what’s key is that the sharing economy is still growing and investing now could provide massive returns in the future. Even large institutions are predicting the eventual takeover of sharing economy platforms over traditional services. The entry of blockchain into the space only creates even more opportunities for investors and consumers to buy into up and coming services.