Inside the Innovative Mind: The Sharing Economy

Few current social and economic trends are more divisive than the “Sharing Economy.” A quick online search will bring up legions of articles alternately praising the freedom it has created for a new class of workers and decrying it as the death knell of traditional business. Regardless of which perspective you take, the massive potential that innovators unleashed with the dawning of this new, rapidly growing, peer-to-peer-driven subset of our economy is astounding. By examining the history and development of this particular innovation, what can today’s entrepreneurs learn and put into practice to augment their own success?

An Undeniable Impact

Success and the sharing economy seem to go hand in hand. The incredible growth and market domination of sharing economy pillar companies such as Uber and Airbnb can’t be denied, and neither can the measurable impact the sharing economy is having on the lives of consumers and workers alike. Airbnb is now booking more rooms than some of the world’s largest hotel chains, and over 600,000 enterprising people have listed their homes or apartments for rental through the digital platform.

The sharing economy is often interchangeably referred to as the “Gig Economy,” and for good reason. Whether it’s providing supplemental income or full-time employment, millions of workers domestically and worldwide are participating in the on-demand economy created by sharing platforms. Opportunities range from providing freelance business services to renting out unused musical instruments or kitchen gadgets to running full-fledged transportation or lodging companies.

How did this massive shift in how we find, receive, and provide goods and services come about?

The Peer-to-Peer Revolution

Perhaps unsurprisingly, the start of the sharing economy boom coincided with the Great Recession, as people seeking additional income turned to the internet to connect them with available opportunities. However, its roots stretch back into the previous decade, when online platforms like eBay and Craigslist began changing the way we buy and sell products. Suddenly, the garage sale had a global consumer base and listings for a huge variety of goods and services were accessible at the click of a button.

This early peer-to-peer economy laid the groundwork for the sharing economy we know today, breaking the traditional model of in-store consumption and introducing the practice and potential of resource-sharing to a wider audience. The access to information offered by the internet helped people connect with each other to swap skills and resources on a unprecedented level.

The advent of social media platforms provided another boost to the nascent sharing economy, allowing consumers and providers alike to vet each other through social channels and establish some level of trust, transparency, and accountability. Services such as Angie’s List took advantage of these social connections to alleviate the stigma and risk of doing business with strangers online.

The final piece of the puzzle arrived with the growing ubiquity of smartphones and digital apps. With the internet in the palm of our hands, sharing economy connections could be made from anywhere, at any time, and with dizzying convenience and ease. The Great Recession added the impetus for democratization of goods and services, and the rapidly-expanding sharing economy we know today was born.

Notable Sharing Economy Success Stories

While we’ve all heard about Uber and Airbnb at length, there are several other sharing economy innovators who bear mentioning. For example, Upwork embraced the possibilities of the growing freelance market to connect workers with diverse skill sets to people in need of specific services, from content creation and graphic design to bookkeeping and customer relations. By combining the low overhead of on-demand service providers with the streamlined connectivity of an online marketplace, Upwork created a valuable resource for freelance workers and consumers alike.

Bringing the success of Angie’s List into the digital age, TaskRabbit does for chores and minor home repairs what Upwork does for business services. It prides itself on a thorough vetting process that reassures its customers that they are in reliable, skilled hands. A similar platform, Thumbtack, has diversified its offerings to include health and wellness professionals and event staffers such as photographers, djs, and stylists. In each of these cases, the resources being shared are unique skills and services.

Embracing Connectivity and Accountability

As these successful sharing economy companies demonstrate, connectivity is the name of the game for innovators in this space. What each of these platforms (including Uber and Airbnb) provide is an easy-access marketplace to in-demand goods and services, connecting a consumer with a specific need to a person offering that particular skill, item, or service. It is the intuitive ease of making these connections that sets successful services apart from those that fail. Successful platforms prioritize user interface and streamlined, memorable design elements to create an experience that is addictive in its ease and convenience.

The other factor that makes the sharing economy possible is accountability, both of service providers and the consumers with whom they interact. This full circle of transparency and feedback allows consumers to feel safe and comfortable in the hands of relative strangers, and gives independent workers the confidence to provide access to their resources and skills. Without a high level of accountability, as Uber is gradually learning in its regulatory battles, the sharing economy can begin to crumble.

Entrepreneurs today exist in a market firmly entrenched in the principles of the sharing economy. It’s no secret that there are still areas of the market that need their own Uber-like platform, and whether that’s your goal or not, there’s no doubt that connectivity and accountability are principles that all innovators must embrace. What the future of the sharing economy will bring remains to be seen, but the pillars of its success can be applied to any venture.

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