Need somewhere to stay the night? Only schmucks book hotels when you can Air BNB it. Ride from the airport? Uber! And if you do insist on driving your own car, give Torment Parking’s clampanistas the cold shoulder and camp in someone’s driveway for peanuts thanks to Parkable.
Yep, the peer to peer economy is here and it’s officially A Thing. In the US, while just 4% have ever earned income from letting out their room, car or goat via a peer to peer platform, that number is growing fast. Here in New Zealand, peer to peer selling is part of everyday life, with about one in 6 kiwis visiting Trade Me every day.
But what’s under the hood of these “Ubers of XYZ”? Is peer to peer commerce about to free us from the economic shackles of Big Everything? Or is the sharing economy itself just another way for the blood of the workers to oil the wheels of capitalism, only one tiny drop at a time?
Nothing answers the big questions like spending an hour around The Moxie Sessions table, so last month at GridAKL that’s exactly what we did. Leading the discussion were two sharing economy business founders: Oscar Ellison from YourDrive and Reinaldo Pamponet from It’s Noon.
For Reinaldo, peer to peer transactions – the buying and selling of ideas, in his case – is nothing short of transformational. It’s Noon connects people looking for creative solutions to their problems with users all around the world. The platform has attracted more than 60,000 users in seven years, says Reinaldo, and along the way is helping to reinvent work itself. That said, the transactions aren’t strictly peer to peer. Most of the people seeking solutions on It’s Noon represent companies or government organisations (such as Panuku Development Auckland) willing to stump up at least $5000 to buy some ideas. The platform itself connects those briefs to people willing to contribute some thinking, either as words or images, then arranges payment (less 10% commission) for the ones the client picks. If it all sounds like a very poorly paid advertising creative department, it shouldn’t; the beauty of It’s Noon (according to its founder) is that the people having the ideas typically have low incomes and live in the developing world. So, while from a client perspective It’s Noon is an affordable source of unexpected ideas, on the contributor side it’s a way to make hard cash when all you have is a mobile phone and a head on your shoulders.
Closer to home, YourDrive is also turning unused assets into cash, by providing a platform for people to rent each other’s cars. Once a car is registered on the platform (and appropriately insured), the owner is free to charge renters whatever they want. While some cars are rented on the basis of cost, says Oscar, as many attract drivers because they’re not the sort of ride you’d find at your local Avis.
Almost a year into running YourDrive, Oscar says he’s seen that a peer to peer platform needs three things to succeed.
Firstly, it needs to offer a good return to the owner of the thing being shared. Every other video vision of the future these days seems to show someone dusting off that seldom-used snowboard in the cupboard so someone can fork over countless dollars for the privilege of using it. But how much would you really get for a week’s use of a three-year-old snowboard? And would it be worth the hassle? Better, Oscar suggests, to focus on higher-value transactions like houses, rooms and (he would say this) cars.
Tickbox number two is network size. A marketplace needs buyers and sellers and this is where some startups stumble. Launching an alternative to Trade Me, for example, isn’t impossible. Finding 3.5 million users to bid on each others’ Lladro figurines is a bit more challenging. So while your fantastic “Uber but for fixed gear bicycle hire” plan might be a hit in San Francisco, finding enough tickets to clip in New Zealand might be tough. Of course, if you’re selling ideas rather than renting bicycles then geography doesn’t matter as much – a key to It’s Noon’s success so far.
The final leg of Oscar’s shareable stool is stickability. A platform that doesn’t give people a reason to come back isn’t going to deliver long term. Oscar gives the example of a dogwalking marketplace – once you’ve met someone who will walk your dog, you really don’t need the platform anymore.
Of course, in a true sharing economy that wouldn’t really matter. My dog gets walked, dogwalkers get paid and everyone is happy. But as String Theory’s Jane Cherrington pointed out, most of what we see as the sharing economy is a pay-per-play marketplace. There’s money in renting but true sharing (you bloody hippy) gets by on happiness and reciprocity.
The trick for the next big sharing success story, then, is to provide an even better experience than people can create for themselves (or remove a barrier, such as lack of insurance or mistrust of strangers). On my street, for example, there’s a wee community library. We put books in; we take books out. (We also get ridiculously smug when our books disappear quickly and angst when they languish.) No money, no transaction, no ticket to clip. It’s as peer to peer as it gets, and it’s hard to see how an “Uber But For Books” experience would improve on it. If Uber for Books existed, the people on my street wouldn’t need it.
And that’s the question peer to peer businesses need to answer: Do the people need the platform? Or does the platform need the people? If the answer to both questions (but especially the first one) is yes, then you might have something people are willing to have their tickets clipped for.
The Moxie Sessions is an internet economy discussion group held once a month in Auckland. Its purpose is to bring together a group of interesting folks from across the economy to talk about how New Zealand can take advantage of the internet to improve its economic performance.
Vaughn Davis is principal at social media and advertising agency The Goat Farm.
Tune into NBR Radio’s Sunday Business with Andrew Patterson on Sunday morning, for analysis and feature-length interviews.