The sharing economy is failing gadi ben-yehuda sx sw 2015
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The Share Economy is Failing: Abort or Retry was my 2015 SxSW Interactive presentation. I talk about what the Share Economy is, how it promises to help us, and the dangers it presents. I outline three ways we can try to reap its benefits while eschewing its more predacious aspects.
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The sharing economy is failing gadi ben-yehuda sx sw 2015
- 1. The Share Economy Is Failing: Abort or Retry?
- 2. Sharing is not new • Libraries • Used clothing/toy sales • Frag Swaps • TimeShares • Cars • Houses
- 3. What Is New: Peer-to-Peer Economy • Reach - in terms of people served • Growth - Companies can form and immediately scale • Seamlessness - easier transactions, lowered barriers to entry • Impact - Reliance on public goods/public spaces without first participating in a public dialogue.
- 4. Base Requirements of P2P Platform 1. Supply: Sizable, searchable inventory 2. Demand: a customer base for that inventory 3. Transaction layer that enables: a. Secure payment b. Trustworthy Delivery c. Comprehensive Insurance
- 5. Requirements for Sustainability • Redress of grievances – e.g. Ratings of service providers/service users • Communication/cooperation with appropriate government agencies – to protect public goods, spaces, and interests • Lifecycle support for employees – e.g. ability to turn “job” into “career”, or at least “gig” into “job.”
- 6. Benefits of P2P Economy 1. More efficient allocation of resources – Homes, cars, food, time 1. Lowers barriers to entering markets (MicroEntrepreneurs) – Pop-up restaurants that require no buildings; rideshares that require no medalions. 1. Enables work/life balance (as worker's needs change) – Lawyers, writers, chefs can go join share economy and make their own hours 1. Creates an access-based rather than an owner-based economy – People can trade management skills for all the privileges of ownership: plan shopping/errands and pay dollars a month for a car rather than hundreds of dollars.
- 7. Five Problems of P2P Economy • A host of –isms: racism, sexism, ageism; • The changing of incentives for owners and of expectations for public spaces and public goods; • Increased uncertainty for individuals and families; • Lack of benefits (e.g. insurance); and • Pitting professionals vs. freelancers
- 8. A Host of –isms.
- 9. New Incentives for Owners
- 11. Lack of Benefits
- 13. Building a Better P2P Economy Explore Alternate business models Cooperate with Governments Think systemically
- 14. Questions?
Editor's Notes
- Sharing is not new Community Goods and Services (mandatory sharing paid for with taxes) Clothing/food drives and swaps Humane Society "shares" pets Rental companies of all stripes Cars Houses Time NetFlix Libraries
- So what IS new? Reach - in terms of people served Seamlessness - easier transactions, lowered barriers to entry Growth - Companies can form and immediately scale – Uber went to 160K drivers in three years. For scale: that’s the entire populations of the town I was born in (Butler, PA) and Gainesville, FL, the town I almost went to school in working as Uber Drivers. Reliance on public goods/public spaces without first participating in a public dialogue.What is new is not sharing, but a peer-to-peer economy
- This new economy requires these base-line elements:1. Supply: Sizable, searchable inventory 2. Demand: a customer base for that inventory 3. A method of matching the two: An easy transaction layer which includes: a. Secure payment b. Trustworthy Delivery c. Comprehensive Insurance
- Redress of grievances – e.g. Ratings of service providers/service usersCommunication/cooperation with appropriate government agencies – to protect public goods, spaces, and interestsLifecycle support for employees – e.g. ability to turn “job” into “career”
- Let's first talk about the benefits of Share Economy:1. More efficient allocation of resources Homes - VRBO; AirBnB; SabbaticalHomes Cars - GetAround; RelayRides Food - LeftoverSwap; Ratatouille; MealShare Time - TaskRabbit; MechanicalTurk; 2. Lowers Barriers to Entering Markets (MicroEntrepreneurs) Food trucks "share" public parking spaces Popup restaurants I can buy a car and plan to subsidize its cost either by renting it out or driving it for Lyft 3. Enables Work/Life Balance (As worker's needs change) Lawyers, writers, chefs can go join share economy and make their own hours 4. Enables an access-based society rather than an owner-based society People can trade management skills for all the privileges of ownership: plan shopping/errands and pay dollars a month for a car rather than hundreds of dollars.
- So what are the problems? Why do I say the share economy is failing?Uber is being banned and the share economy can become its own trapprofessionals are being displaced by freelancers (this is the flip-side of the ownership vs. access economy)Families as well as businesses require a certain degree of certainty to make their own projectionsInsuranceThe changing of incentives for owners and of expectations for public spaces and public goods And of course: a host of –isms: racism, sexism, ageism,
- First, let’s talk about the ‘isms.’ Let’s start by acknowledging that we’re all prejudiced: we all have biases. Hotel chains, car rental agencies, and other institutions have rules of conduct that help to create a barrier between people’s biases and their behavior. AirBnB, however, has no such safeguards, and that’s why, as ValleyWag so delicately put it “Harvard Study: Black People Get Screwed on Airbnb”
- Incentives for owners:Why do you buy a home or an apartment?Why do you buy a car?What happens when anyone can become a landlord for people who stay only a few days?What happens when every street could potentially be a parking lot for a rental company?What about homes? It makes sense (in a capitalist way) to rent out your apartment in NYC if (a) you can stay with friends for a night or you are planning on being away and especially if (b) you are in a rent-stabilized unit. Until, of course, you get evicted.But let’s say that you don’t get evicted. Let’s say it’s just your neighbors who get annoyed at people coming and going at all hours of the day and night. Is it reasonable for them to be annoyed? And what about owners of rental properties? In New York City, here’s what one building charges for rentals: Studio 1 ba $3480+/mo1 Bedroom 1 ba $5300+/mo2 Bedrooms 2 ba $9170+/mo That comes out to about 115 a day for a studio 175 a day for a 1-bedroom, 300 a day for a 2-bedroom. . What do those same spaces list for on AirBnB?170 for a studio; 275 for a one-bedroom; 479 for a two-bedroom; That would be the same as charging4395 for a studio. 7110 for a one-bedroom; 12385 for a two-bedroom, And that’s only if they are able to rent out their properties 85% of the time. 34 % more for a one-bedroomEven if a property owner does not list an apartment on AirBnB, simply by being in the market, the company has the potential to raise prices on renters.That makes it a public policy issue.
- CertaintyLet’s talk about Uber. One of the phrases that is bandied about quite a bit is “monetizing downtime,” which is great for people who ~have~ downtown time and need to monetize it. Think: people who are unemployed, underemployed, or with few other commitments. But let’s talk about three people to whom these do not apply, but whom they certainly affect: People who do not have downtime, and rely on a steady job for all their income, e.g. working parents, older workers.People who do have downtime, but don’t want to monetize it: the fully employed who do community service, volunteer work, intellectual pursuits.People who have neither: think people who are over-employed, working multiple skilled jobs or shifts to make ends meetBut other people monetizing their downtime has a direct effect upon these three groups of people in the form of lower wages, fewer hours, and an expectation that their income is fungible for time according to their employers’ schedules.Without the certainty that comes with full employment, employees lose in critical ways:Skill development, because investing time now in training that will pay off later is unwise if you can’t be assured of “later.”Family planning. During the Great Recession, fertility declined. People do plan their families around the assumption of wages.Uncertainty also leads to anxiety, which itself leads to a whole host of medical issues, which is pretty bad if you don’t have insurance.
- InsuranceThis is a very big deal. In an article in Global Post, Anne-Marie Slaughter, includes insurance as the only dark cloud in an otherwise sunny piece on the share economy. Robert Riech, however, is much more bearish, citing the lack of insurance as a huge factor. But let’s just take a look at the numbers. Even if you made exactly the same take-home salary in the share economy, you’d be making 29% less than your fully-employed colleagues.
- Professionals vs. freelancersAnd that is only one way in which the share economy pits professionals against freelancers, setting up what could be a return to guilds and the use of city hall--or even congress--as a cudgel for one to use against the other. Recall why child labor was finally curtailed in the US: because during the great depression, adults had to compete against children for wages. That’s what the share economy may come down to: professionals battling freelancers for total compensation. But it doesn’t have to be this way. When time and money are fungible, employers can look for workers who are paid in “flexibility.” People with set schedules cannot compete against that.
- 1. Go Local – What may save a company is giving people a stake in the entire company, not only in their own profit they derive from it. Think: true cooperatives—which are closer to sharing—than designing “platforms” that allow two groups of people to negotiate with one another while the company takes a slice of each transaction. Instead of a “Bank of America” Model, think a “Credit Union” model. 2. Work directly with government – there’s a reason that restaurants are so heavily regulated. Working with governments will help prospective share-economy companies at least understand what traditional companies have had to face to ensure safe operating. (Think: what is a restaurant’s responsibility for food-borne pathogens that it spreads?) 3. Think systemically – what are public goods that a company relies upon but doesn’t pay for? Think: Uber drivers who pick people up from air ports, but don’t pay fees that ensure adequate security, repavement of roads, etc. In the end, this might not be enough. We may not be able to continue developing peer-to-peer models for every conceivable industry. The costs may simply outweigh the benefits. But in the meantime, we can all do something to make share economy models more humane and sustainable