The End of Ownership: America’s New Sharing Economy
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.