The End of Ownership: America’s New Sharing Economy
After defining ourselves for generations by possessions, a dramatic cultural shift is under way. In the wake of a collapsed economy, what matters to a growing number of Americans is not so much ownership as access. That's made Boston ground zero for a powerful new force: The sharing economy.
The “lovely, light-filled room” leaped out at me from its online listing. Located in a historical adobe just outside the Plaza, in Santa Fe, the room was airy and bright, with a bed topped with a cozy blue-and-white quilt and a pair of burnt-orange pillows. A mint-green bookshelf lined with popular novels stood not far from a small nook containing an antique couch, on which I immediately imagined myself curling up into a ball and reading. Clicking around, I saw photos of other parts of the house: a private bathroom; a small outdoor courtyard with flowering trees in full bloom; and a kitchen with multicolored Le Creuset pots and pans hanging on the walls. Katy, the woman who had posted the listing, looked kind. She had bright blue eyes and bangs that peeked out from under a knit hat. And, perhaps most important, she had a five-star rating. I could sleep there, I thought. So I booked.
How did I end up renting Katy’s spare bedroom? I’d been invited to a wedding in Santa Fe, but the hotel where the guests were staying was expensive, and my budget was tight. So I decided to try out Airbnb, a website that allows you to rent rooms in private homes for less than what hotels and B & Bs charge. I logged on using my Facebook profile and was pleasantly surprised to find that friends of mine had already created accounts on the site. As I clicked through the listings, I was impressed by the photography, which looked like it could have been cribbed from the pages of Dwell. The booking engine was simple, and soon I was corresponding directly with Katy, who turned out to be friendly and welcoming. Later, as my husband and I were driving to her house, I texted her to say we were close by. “Go on in,” she wrote back. “The door’s unlocked.”
For the next few days, we came and went as we pleased. Katy left us organic eggs and Greek yogurt for breakfast. She offered suggestions about restaurants in town, and sites to visit in the area. Everything, in short, was just as lovely as advertised—and the whole experience got me thinking. We weren’t just sleeping and vacationing at Katy’s house. We were also taking part in a profound cultural shift in the way that a growing number of Americans are choosing to live their lives.
A startling number of young people, it turns out, have begun to question one of the central tenets of American culture: ownership. It’s a change that has arrived thanks to a confluence of developments. Times are tough. For the first time, a rising generation of Americans are genuinely concerned that their standard of living will be worse than it was for the generation that came before them. Simultaneously, rapidly evolving technologies are enabling a new kind of connectedness and sharing, just as more of us than ever before are moving to urban areas. And more and more of us are at last awakening to the terrifying idea that our quintessentially American drive to own and consume more is bringing about dramatically harmful climate change. As a result, many of us are starting to rethink what it means to own something. In turn, that’s giving rise to a new social and commercial landscape in this country, and even a new way of life. What we’re witnessing, in short, is the emergence of the sharing economy.
The principle of ownership is fundamental in this country—possession, after all, is nine-tenths of the law. It was more than a century ago that conspicuous consumption began to emerge as an animating component in American life, and by the time the 1950s rolled around and families started moving to the suburbs en masse, the accumulation of possessions (new appliances, bigger cars, fancier houses) had become our default way of signifying success. “Each home was to be its own fiefdom,” Douglas Rushkoff writes in Life, Inc. (2011), describing the shift. “Self-sufficiency was part of the myth of the self-made man in his private estate, so community property, carpools, or sharing of almost any kind became anathema to the suburban aesthetic.”
Corporate America saw opportunity in the rise of conspicuous consumption, of course. After developing a marketing technique called “perceived obsolescence,” businesses began rolling out new versions of products that were somehow always better, faster, and smarter than the ones that had come before. The psychological effects were powerful, and they’re still with us today—as anybody who has seen, or stood in, the lines outside of an Apple store before the release of a new iPhone can attest.
As Americans worked ever harder to own more, anything associated with common use and collective ownership came to be seen as undesirable and off-putting. Even in the late 1990s, when Robin Chase, the cofounder of Zipcar, did surveys on the streets of Boston in the run-up to the company’s launch, respondents were recoiling at the mention of sharing. “I needed to distance us from that as a concept,” she told me recently. “Imagine if hotels were called bed-sharing.”
These days, though, growing numbers of Americans are coming around to the idea of sharing more and owning less. The 100 Thing Challenge, a movement created by simple living advocate Dave Bruno, encourages people to whittle down their possessions to only 100 items. (In April, he launched the Reduce Month campaign, prodding people to get rid of one item a day for a month or longer.) Housing in some high-profile instances—like the “micro apartments” proposed for Boston’s Innovation District—is being reconfigured to accommodate smaller living spaces and fewer objects. Graham Hill, the Internet entrepreneur and poster boy for the minimalist-living movement, recently penned an op-ed in the New York Times about the spartan life he leads in his 420-square-foot apartment, where he owns six shirts, 10 bowls, and a collapsible table and bed. For weeks the piece occupied a place on the Times’ most-emailed list.
New research is demonstrating the extent of this change in attitudes. A study released this February by the Pew Research Center found that the “financial mileposts” that have tended to define adulthood for generations—buying a car or a home—have seen a dramatic shift in the wake of the recession. As of 2007, two-fifths of Americans under the age of 35 owned their homes or apartments, but that number had dropped to one-third by 2011. Today, only 66 percent of people age 25 and under own cars, a 7-percentage-point drop since 2007. In 2001, 50 percent of young adults under the age of 35 carried credit card debt, whereas only 39 percent of that same age group did in 2010.
Some of this, of course, is a result of the economic downturn. But that’s not the whole story. There’s been a shift in mindset as well. The rise of social media has helped change the perceived cultural value of sharing. “Facebook rebranded it,” Chase says, noting the power of the company’s “Share this” button. And according to Henry Mason, the global head of research at the consumer-tracking network Trendwatching.com, young people are increasingly forgoing the “hassles of ownership.” What they care most about these days, it seems, is not ownership but access.
Airbnb got its start in the fall of 2008. Its founders, Brian Chesky and Joe Gebbia, had recently graduated from the Rhode Island School of Design and were scraping by in San Francisco, barely able to pay their rent. When an industrial-design conference came to town, they realized they might be able make some extra money by taking in a few boarders who were coming to the conference but didn’t want to shell out for an expensive hotel. So they built a website, bought some air mattresses, and wound up playing host to three people for the weekend.
Today, Airbnb has become an international phenomenon, with more than 12 million room-sharing bookings as of 2012. A booking is now made every two seconds on the site, and more than 650 Boston listings have been added just in the past year. Industry analysts estimate that in time the company could be valued at $1 billion. That’s a lot of air mattresses.
Chesky and Gebbia were at the vanguard of the emerging sharing economy, in which peer-to-peer exchanges of goods and services are now hailed as a more economical, ecological, and social form of ownership. Scores of new online marketplaces are cropping up every week, most of which charge a nominal fee to broker the exchange of goods and services between strangers. Forbes estimates that the revenue generated from these exchanges will surpass $3.5 billion in 2013. Time called collaborative consumption one of the “10 Ideas That Will Change the World.” And in March, The Economist devoted a cover story to the subject. People are starting to pay attention, and for good reason.
Consider the company started by Shelby Clark, who moved from San Francisco to Cambridge in 2008 to attend Harvard Business School. Clark got rid of his car during the move, relying on public transportation and Zipcar to get around town. But on one particularly awful winter day he discovered that the nearest Zipcar was two and a half miles away, near Inman Square. As he trudged over to it, with the elements assaulting him from every angle, he noticed dozens of cars covered in snow that hadn’t been driven in weeks. Suddenly, he had an idea. If people were already comfortable with the sharing concept of a company like Zipcar, he thought, perhaps they’d be willing to actually share their own cars. So in 2010 he launched RelayRides, a national peer-to-peer car-sharing service that has raised $13 million to date from Google Ventures and General Motors Ventures, and that announced a partnership with GM last March.
These days, people can “monetize” much more than just empty bedrooms and idle cars in driveways. Driveways themselves are up for grabs, thanks to ParkatmyHouse. A site called Zimride has given digital form to the old college ride-sharing board, allowing you to earn cash by taking passengers with you on long road trips. Then there’s SideCar, an app that transforms everyday drivers into de facto cabbies, by allowing users to hail them with their mobile phones. Ride a bike instead? You can rent one by the day on Spinlister. And if you’re like the average owner of a power tool, who uses it for a lifetime maximum of just 13 minutes, you can put that drill or jigsaw up on NeighborGoods and let the folks next door rent it.
All of these websites and apps are up and running in the Boston area, and countless others are springing up in cities around the country. It’s safe to say, in fact, that if you look around your home right now and can identify at least one possession that you haven’t used in at least a week, someone out there is building a platform to help you share it. And that doesn’t even include the intangible assets that we all possess: our time, our interests, and our abilities. Animal lovers can find (or become) dog sitters through DogVacay. A site called Vayable enables people to play tour guide to visitors traveling to their city. And TaskRabbit and Skillshare allow people to commoditize their own resourcefulness.
Add it all up, and you’ve got a reconfiguration of how we see—and sell—our value in life. “Whether you’re a business or an individual,” says Lisa Gansky, the author of The Mesh: Why the Future of Business Is Sharing (2010), “chances are that you spent some amount of time since 2008 realigning the true cost of things with their true value. So for many of us, we looked around our homes, or our factories, or our offices, and we realized that a lot of things that we collected or we owned, we didn’t necessarily use well, or appreciate, or get value from.”
The sharing industry’s cheerleaders tout the financial and environmental benefits that the peer-to-peer economy creates, like the fact that Airbnb travelers in San Francisco contributed $56 million to the city’s economy last year. More important, they claim that forgoing ownership means that you’re tapping into an enlightened network of like-minded individuals who share your values. “You know how Cracker Jack has the surprise inside?” Gansky says. “The sharing economy has the surprise inside, too. Most people start doing one of the services because it’s financially sensible. But the surprise inside is that, after we experience these things, we actually tend to realize that we kind of like the connection with people. And it feels really intimate, and there’s a kind of serendipity that happens.”
When Derek Fraser first entered the sharing economy in 2011, he wasn’t looking for serendipity. Like many who were faced with new financial realities when the economy bottomed out, he had turned to sharing because it was necessary. In 2009, at the age of 26, he had been laid off from a teaching job and had begun collecting unemployment. Adding to his financial challenge was the fact that his wife, Pamela, had just gone back to school. The couple sold one of their cars to cut down on expenses, and Derek took some part-time work. But then his unemployment ran out. “It was so bad,” he says. “It was not something I expected, and I was disheartened.”
Then one day he noticed a flyer in the Davis Square T station promoting RelayRides. Is this for real? he wondered, and looked it up online. “It seemed legit, like a startup company,” he says. “It didn’t seem like a scam.” Already familiar with the concept of car sharing through Zipcar (which is often called the gateway to the sharing economy), he decided to give it a try. He and Pamela put their Prius up on the site, and within hours had received a request from a driver.
Today, they’re regular users. Derek gets a text message every time a driver wants to rent his car. After checking with Pamela about their schedule, he looks at the driver’s online profile, and if the person seems okay, he gives the transaction the go-ahead. From there, the driver uses a smartphone app to unlock the vehicle, with the keys waiting for him inside. The driver gets to use the car for the agreed-upon window of time and is expected to return it to the same parking spot, with the gas tank refilled. The driver’s credit card is charged through RelayRides, and Derek can negotiate additional fees if the car comes back late, is messy, or has gone over the mileage they’d agreed upon beforehand. If the driver damages the car, Derek can file a complaint with RelayRides, which will cover the cost of repairs and give him $30 a day until his car is fixed. Derek is paid a few times a month, and RelayRides takes 25 percent of each rental fee as commission.
The Frasers earned $120 from their first rental, and have now rented out their car nearly 100 times. (According to Shelby Clark, of RelayRides, the average user earns about $250 a month.) They credit the site with helping them stay afloat through Derek’s period of unemployment. And in the summer, when things get busiest, they make enough to cover their monthly car payment.
Almost everybody I spoke to for this story said that, like Derek Fraser, they first became a part of the sharing movement for economic reasons. In the process, they had to get over what I’ve come to think of as the Ick Factor: an aversion to sharing that’s rooted in the fear of strangers, germs, and awkward social encounters. Think of all those lessons our parents taught us: Don’t talk to strangers. Never get in a car with someone you don’t know. If you want to take part in the sharing economy, you somehow have to push aside your mother’s voice in your head and develop a sense of trust.
That was certainly the case for Fraser and his wife. Who were these drivers? What would happen if someone crashed his car or, worse, just took off with it? Was there insurance? Clark worked on this problem for months before officially launching the business. “Insurance companies are by definition risk averse,” he says. “If you’re a pioneer, it’s very difficult.” In the end, though, after some haggling, he got what he needed. All cars in RelayRides’ network are covered for up to $1 million in damages, and all renters’ driving records are screened before they can check out a car. (Insurance companies, meanwhile, are eyeing these peer-to-peer exchanges warily, and some have changed their policies so as not to cover car-sharing accidents.)
For Airbnb, the push to earn users’ trust involves verifying the credit card, phone number, and address of all prospective renters before allowing them to post listings on the site. “We’ve really cleaned it up and brought it above board compared with the Wild West of Craigslist,” says Molly Turner, the company’s public policy director. The site also often pulls in information from Facebook, so that when you look for a room in, say, Paris, it will identify its users who also exist in your extended network, which can provide an extra layer of assurance. When I logged on to the site recently, I found rooms offered by people who went to my high school, and rooms in the homes of friends of friends.
Most peer-to-peer sites now also allow users to rate their experience. In the past, reviews were a one-way street. Only customers wrote them—about, say, hotels or restaurants. But in the sharing economy, the process works both ways. You can rate an owner on Airbnb, just as you would a hotel, but now they can also rate you—as a five-star house guest, maybe, or as a slob who left Cheetos crumbs all over the couch. Increasingly, these reviews will attach themselves to your online persona. Experts predict they’ll become a kind of currency, which you can then use in future transactions. Already, a company called Virtrue is trying to carve out a piece of this people-ranking market, by syncing up ratings from peer-to-peer sharing sites with personal information pulled from LinkedIn and Facebook. It’s like Yelp, but for humans.
As these businesses evolve, plenty of people are now entering the sharing economy to make money rather than connections. Scrolling through Airbnb’s Boston listings recently, I found one user offering a half-dozen properties. Some people on RelayRides have bought second and third cars just to earn more from the site, which runs counter to the company’s “fewer cars on the road” sensibility. (It likes to say that one car shared through its site takes 14 others off the road.)
But as these micro entrepreneurs get increasingly savvy, they, along with the sites they’re using, have come under scrutiny from municipal officials. One person who thinks about such challenges is Nigel Jacob, Mayor Menino’s adviser on emerging technologies and the cochair of the city’s office of New Urban Mechanics. He’s met with several sharing startups to learn how they operate, and has been in touch with leaders in other cities to see how they ensure public safety.
He’s had a lot to absorb. Right now in New York City, many Airbnb hosts are finding that they’re violating laws governing short-term rentals in large buildings. The New York Times recently ran a story about one unlucky host who, after charging a Russian tourist $300 to stay in his apartment while he was away, was threatened with $40,000 in fines by the city for running an illegal hotel. In 2011, the most recent year for which records are available, New York investigated 1,897 such violations. Last year in San Francisco, meanwhile, two peer-to-peer shuttle services, SideCar and Lyft, were each issued a cease-and-desist order by the city and fined $20,000 for operating outside of the formal taxi-and-limousine permitting process. (San Francisco lifted the order in January, saying it needed to revisit the regulations.) And just as crowds started flooding into Austin, Texas, this past March for the annual South by Southwest conference, the city council there passed a law that made charging for ride-sharing a crime.
It’s understandable that cities want to regulate these new businesses, but their early attempts have been less than effective. “A lot of times you end up with regulators stopping things because they run afoul of existing regulations, or allegedly do, and not necessarily because they’re bad for the public interest,” says Nick Grossman, a visiting scholar with the MIT Center for Civic Media.
“There’s no obvious place to put the sharing economy within the existing legal framework,” says Janelle Orsi, an Oakland, California–based attorney who directs the Sustainable Economies Law Center. Orsi says that when she first began working on what she calls “sharing law,” she expected that she would be helping nonprofits or cooperatives, not overseeing peer-to-peer transactions. Sharing as commerce, she says, “brings up so many other legal issues.”
The good news for Boston, Nigel Jacob says, is that City Hall hasn’t yet felt the need to muck things up with regulation. “There’s a lot of fascinating activity around sharing as a new mode of collaboration and economic expression,” he told me. “The issue for us is, which side do we put ourselves on? Do we regulate or do we not? We try to use the regulatory aspect of government sparingly, as it often can backfire.” The city is looking to foster innovation, he says, and cracking down on these startups would run counter to that.
Plus, he has a personal interest in seeing these kinds of companies succeed. He’s just listed his own place on Airbnb.
Jacob is a step ahead of me. Although I’m excited about the ways in which the sharing economy could improve my own life (think of the cash!), I have to admit I haven’t completely overcome the Ick Factor. After my great experience in Santa Fe, I filled out a listing for my home on Airbnb—but have yet to take the plunge and turn it on. I’ve added my car to the RelayRides network, but the first query I received was from a guy who wanted to rent my car for a week, which made me panic and turn him down.
To better understand, and perhaps overcome, my aversions, I went to see Juliet Schor, an economist who teaches sociology at Boston College. Schor is the author of True Wealth (2010), a book that offers suggestions for rethinking what’s valuable in our lives. “In order for our economy to survive, and for humans to survive and thrive in the current very perilous ecological context that we find ourselves in,” she told me, “we need more structures that encourage cooperation and sharing.” Like others I spoke to for this story, she noted that sharing itself isn’t new, particularly among low-income communities. But, she added, it certainly is a new concept for those with high cultural capital, people who don’t need to share, that is, but increasingly want to.
Schor assured me that I’m not the only one feeling slightly unnerved by the prospect of sharing my possessions with strangers, or of paying people to use their stuff in the hopes of creating a “connection.”
Schor was wearing a shawl as we spoke, and at that point in the conversation she pulled her hands out from under it: One hand represented a friend, she said, and the other a business. She then used both hands to draw a box in the air between them. “So these sharing sites and practices are, I think, creating a third kind of intermediate zone, in which it’s all being worked out and invented. And as people are moving there, they struggle with things: Well, how much market should there be? How high should my standards be? Should I expect professional quality?”
That zone is where most of us now reside.
In her research, Schor explained, she’s finding that her subjects are increasingly eager to work outside the standard, business-as-usual marketplaces. Call it bailout hangover. But even with the trust-building exercises that these new sharing companies walk users through, people are still not exactly comfortable—or clear on how to navigate once they’re in the system. “People don’t expect the same kind of relationship that they do [in] going to the market and buying the service from a professional,” Schor said. “But it’s also different from what they would just do with a friend.”
Schor pointed me to the work of Anny Fenton, a Harvard graduate student whose research looks at how people are operating within the sharing economy. In a recent paper, Fenton studied social interactions among RelayRides users. Her findings are fascinating. Despite all of the talk about community and connection that we’re hearing from advocates of the sharing economy, car owners using the site said that their relationships with renters were “sterile,” “anonymous” and “nothing.” But when those same owners were asked to compare their rental service with that offered by a company like Hertz, time and again they said they had something much more personal to offer, and assumed, as a result, that renters would treat their cars better than a typical rental car. “Owners create a contradiction as they transform their personal property into a commodity,” Fenton wrote, “but do not expect it to be treated like one.”
When I asked Fenton about her own experiences making peer-to-peer exchanges, she laughed. She’d stayed in an apartment in Paris with a host who was drawing most of his income from Airbnb, and though she’d stayed in B & Bs many times before, this experience struck her as very different, so much so that she behaved differently. One night her host invited her to dinner—and she went. Throughout the meal, he regaled her with stories of his past relationships and ended up paying. “It’s cheaper than therapy,” he told her.
Was she a friend? A customer? She left puzzled by the exchange, but says it captured the inherent tension that underlies so much of the sharing economy: Are we actually making more connections? Or are we just commoditizing our relationships?
When I posed this question to MIT’s Nick Grossman, he sat back in his chair and nodded. “But there’s another kind of social stickiness that these networks can help overcome,” he said, “which is just the awkwardness of broaching a conversation.” In many instances, it’s not the act of sharing itself that’s difficult, it’s the social aspect of having to make the ask, whether it’s borrowing your neighbor’s snowblower, crashing on your old college roommate’s couch, or asking your circle of friends to help you move. “Those conversations are a little bit hard to broker,” he says. “It’s not the Ick Factor, as in, You’re sitting in my car. You’re sitting in my house. It’s more like, How do we even have the conversation about my borrowing your snowblower?”
It’s becoming easy to see how, in circumstances where people feel strange about asking for favors from their friends or neighbors, they’ll turn to the marketplace instead. We say we’re getting into the sharing economy to build community, but you have to wonder whether it’s also a way to avoid engaging with the community we already have.
Rachel Botsman, the coauthor of What’s Mine Is Yours: The Rise of Collaborative Consumption (2010), has calculated the value of the peer-to-peer rental market to be $26 billion, and Forbes anticipates that the market will grow 25 percent more in the coming year. Big corporations increasingly want in, so much so that there’s now a VC firm, Collaborative Fund, that’s dedicated to investing in sharing-based startups.
This weighs on some of those who are actually participating in these marketplaces at the individual level. A bit of a backlash has even begun. “Sharing for Profit–I’m Not Buying it Anymore” was the title of a recent post on Shareable, an online magazine which until now has been one of the most vocal proponents of the sharing economy. In it the author, Sven Eberlein, writes, “What once used to be the most basic human value your parents ever taught you”—sharing—“seems to have magically morphed into a well coiffed, profitable, and fashionably cool buzzword for an entire industry.”
Janelle Orsi, the sharing lawyer, has similar feelings. “I’m disappointed in the structure and the financing of most sharing-economy companies,” she says. “Because they’re mostly VC-funded, there’s a great deal of incentive for their founders, and for their funders, to sell out to a larger company.” It’s happened already: Avis recently bought Zipcar for $500 million. So it’s not all that far-fetched to imagine that Airbnb could one day be purchased by, say, Marriott. “And when that happens,” Orsi says, “it means that the key platforms of the sharing economy will be increasingly consolidated under the ownership of richer and richer people. Which is ironic.”
As sharing sites increase in popularity, however, Schor anticipates that they’ll begin to fragment and become more targeted to specialized audiences. More nonprofit options, meanwhile, may arise to serve those users who are turned off by the idea of sharing for cash. All of this makes her feel cautiously optimistic. Commerce and the desire to make money, she thinks, don’t have to be the sole drivers of the sharing economy.
It’s been over a year since my stay in Santa Fe, and in that time, I’ve noticed a bit of rewiring in terms of the way my brain thinks about ownership. As I talk about sharing with my friends and colleagues, I’ve felt an untightening of the grip—both physical and mental—that I’ve held on my possessions. Even my own mother, who instilled the stranger-danger sentiments in me, keeps asking me if I’ve listed my place yet on Airbnb.
I still haven’t. But, like Schor, I’m optimistic. I’ve found that the rise of the sharing economy, and the difficult questions it has forced me to confront, have made me reevaluate all that I own. I find myself thinking, Do I use this enough? Can it help someone else? as I sort through my possessions. I’ve also become less inclined to make purchases without thinking about whether I can just share something instead. More important, as I’ve signed up to explore dozens of sharing sites, I’ve begun to realize that I can own much less.
As for the Ick Factor? I’m doing my best to get over it. I may not become a homespun hotelier any time soon, but I’ve been snapping photos of my housewares and am open to sharing them. And if you’re looking to rent a Jeep, there’s a lovely one parked just outside my house.
For more, check out “Thank You for Sharing,” a quick look at what’s on offer in Boston’s burgeoning sharing economy.
Source URL: http://www.bostonmagazine.com/news/article/2013/04/30/end-ownership-sharing-economy/