The new sharing economy concept is all about trust and if you're not 4.9, you're nothing!

1. a sharing economy
torque
torque
data
5th September, 2014
@Torque Solutions (Australia) Pty Ltd
Commercial in Confidence
data

2. “In the sharing economy,
you’re 4.9
or you’re nothing”
Anon Twitter User

3. what
is the
sharing
economy?
A.K.A: Social Lending, The Mesh Economy, Peer-to-Peer Economy, Collaborative Economy, Collaborative Consumption

4. what
does it do?
+ Distributes, shares and reuses excess capacity in goods and services
+ Participants share access to products or services, rather than having individual ownership
+ Allows individuals and organizations to directly share existing resources rather than wait
for third-party businesses or governments to deliver the desired goods and service
Access is better than ownership.

5. how are
we doing it?

6. how are
they doing it?
For these businesses to be able to offer products and services at a discount to mainstream
competitors…
They rely on replacing regulation with trust
Institutionalised Trust (Regulation) is “high-friction”, I.E. labour-intensive and costly

7. what are
the rules?
for the time being, the boundaries of the sharing economy are protected fairly rigidly. for
example:
+ If you’ve ever been caught driving more than 20 miles over the speed limit, you can’t rent a car
on RelayRides
+ Aspiring Lyft drivers must pass a background and DMV check and get approved by a mentor,
who judges applicants not just on driving ability but on personality
+ DogVacay hosts go through a five-step vetting process that includes training videos, quizzes,
and a telephone interview
http://www.inc.com/christine-lagorio/sharing-economy-trust-pipe-dream.html

8. How do we
avoid risk?
+ Reputation - Crowd source regulation - Peer-review
Spreads work and cost
Increases range of experience (more data points)
Reduces risk
+ With a suitable range of peer-review, risk can be reduced to a degree where it is feasible for
agencies to guarantee user’s products and services
+ The ability to gather, store, and present large volumes of data makes this possible

9. to trust
or not to trust?
here are some of the problems:
+ You’re relying on ‘secondary trust’
+ The reviews may make you trust the provider, but why should you trust the review?
Are other people’s expectations / standards the same as yours?
Do you trust the reviewers opinion?
What effect does reciprocity in reviews have?
Opportunists/fraudsters gaming the system
bought reviews

10. are peoples standards
the same as yours?
35%
30%
25%
20%
15%
10%
5%
0%
% Reviews
1 Star 2 Star 3 Star 4 Star 5 Star
% Reviews
60% 4 / 5 star
netflix user ratings
120%
100%
80%
60%
40%
20%
0%
% Reviews
1 Star 2 Star 3 Star 4 Star 5 Star
% Reviews
blablacar user ratings
99% 5 star
http://tomslee.net/2013/09/some-obvious-things-about-internet-reputation-systems.html

11. Reviews:
Retribution or collusion?
The tightness and sequence in timing suggest that
sellers reciprocate positive feedback and ‘retaliate’
negative feedback.
Seller retaliation also explains why more than 70% of
cases in which the buyer gives problematic feedback and
the seller gives positive feedback (blue dots in Figure 1),
involve the buyer giving second – the buyer going first
would involve a high risk of retaliation.
http://ben.orsee.org/papers/engineering_trust.pdf

12. how do you
combat fraud?
Transferring existing analysis and modelling experience
from search and matching to fraud identification
Built mainly on open source technology and analysis
tools but how many hours of resource are required?
http://nerds.airbnb.com/architecting-machine-learning-system-risk/

13. scale
and trust.
+ Small communities leave little room for
fraudsters and opportunists.
+ Smaller groups mean greater levels of familiarity
+ Risk/reward not as great for the effort involved in
perpetrating fraud
+ Significant growth means addressing the increased
risk of fraud through your platform
Increased “friction”
Potentially significant development
+ How do small companies easily address these issues
without the need for significant investment?
Service provision?
BUT
+ Many sharing economy companies
are funded via venture capital from
Start-up
Venture capital demands fast and
Significant growth

14. thank
you.