Can the Collaborative Economy Really Scale?
I’m trying hard to be cautiously optimistic, but the pessimist in me may be winning.
New York City’s bike share program launched on Memorial Day. It’s the talk of the town, and the largest such program in the world. It’s also a sterling example of the Collaborative Economy, the topic of new and important research by my colleague, Jeremiah Owyang. He defines the movement as customers sharing goods and services rather than buying them, which redefines the buyer seller relationships while simultaneously disrupting and disintermediating longstanding business models.
From banking to labor, hospitality to fashion, transportation and real estate, his research lists over 200 digital platforms that have recently emerged to get you a ride to where you’re going, a place to lay your head when you get there, and even toys for your kids to play with that will be gone before they’re outgrown.
The sector is growing rapidly, yet so are forces opposing it: regulation (e.g. AirBnB is illegal in New York City), trust issues between buyers and sellers, and other uncertainty factors. Jeremiah’s advice for businesses is, in a nutshell, you won’t be able to beat them, so join them. Neiman Marcus could, for example, launch its own version of Rent the Runway (revenue aside, such a move could be worth its weight in data collection).
Where I question the growth potential of the collaborative economy is from the perspective of a resident of midtown Manhattan. Collaboration is built on a foundation comprised of common values, community standards and trust.
I’m no sociologist, but I’ve lived and traveled abroad enough to understand that (love ’em or hate ’em), community values are radically stronger, not to mention vigorously reinforced, when the communities in question are distinct, defined and undiluted. Multi-culti certainly has its advantages – that’s why I elect to live in the middle of Manhattan – but commonly held values and community standards are not one of our defining characteristics. Anyone who’s been here knows it’s not tidy like Switzerland. We don’t wait for the light to turn red before crossing the street, like everyone does in Germany. And no way, no how could you get the entire population of the five boroughs to wear a yellow shirt every single Monday (it’s like a site gag for the first-time Bangkok visitor).
My personal experience with the collaborative economy has always been as an enthusiastic early adopter, only to see that enthusiasm quashed as something tribal grows to global proportions. I was word-of-mouth cheerleader when Zipcar launched (I was such an early member customer service later thought my membership number lacked digits, it was so low). Fast-forward five years: the service goes wide, there’s mass advertising (as opposed to a constant reinforcement of consideration-for-the-next-user oriented rules), and pretty soon I’m picking up cars with empty gas tanks, or worse, trying to pick up cars previous renters haven’t bothered to return.
Nice that they always cheerfully refunded my money – but what about that wedding I missed when I didn’t have wheels to get there? The day Avis bought Zipcar, I cancelled my membership.
Pictured above is a shiny new Citi Bike a mere four days after the service launched in Manhattan. It’s in a station a couple of blocks from my loft, facing a fast food joint. Half the bikes at that particular station are already receptacles for discarded cups, food wrappers and napkins. Likely some have yet to take their maiden voyage.
Enterprises and large corporations will participate in the collaborative economy. Citigroup, Avis – they already are. As the movement grows, this will present new challenges internally as well as externally. How will collaboration scale in communities like New York City, LA, or Chicago that just aren’t that…communal? And how can enterprises keep alive a spirit of entrepreneurship and looking out for the other guy, not just yourself?
Consumers won’t accept “just” a refund when collaboration and community erode. Betrayal of trust and community standards run much deeper, and will require innovations in the customer service aspect of the collaborative economy.
The next couple of years will be interesting indeed.
Link to the full Collaborative Economy report.