The sharing economy has only just begun

www.nesta.org.uk/feature/sharing-economy-has-only-just-begun/
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You may have heard enough about the sharing economy for a lifetime during the peak of its hype a few years ago – but that was just the beginning of its development as an economic paradigm. It was an awkward first step given the astounding number of broken laws, fines, and false promises its headliners, Airbnb and Uber, left in their wake.

Despite initially being implemented by an especially potent form of capitalism – venture capital-backed technology entrepreneurship – the basic premise couldn’t be more relevant today. Sharing is good for people and planet, reducing consumption, broadening access to resources, and reweaving the social fabric if done right.

In fact, we need sharing more now than ever as climate change, unprecedented wealth inequality and social division shake the very foundations of our civilization. Moreover, it’s unlikely these challenges can be addressed individually – we need systemic solutions to a systemic challenge.

Sharing is a collective strike at the root of our tangled crises.

Car sharing, the most studied sharing service, illustrates how a real sharing economy can contribute to a just and sustainable global transition. A UC Berkeley survey of North American car sharing users found that one shared car replaced up to 13 owned cars, that shared cars were 10 miles per gallon more efficient, and that 51% of users who joined had no prior access to a car.

Another showed that car sharing boosts household income and the local economy to the tune of around $7,000 per car. Car sharing can also build social capital if the operator is a cooperative, nonprofit, or transit oriented.

Few solutions have such deep, multifaceted impact and such long, successful track records in human history as sharing. In fact, some say our species' ability to share stories and cooperate at scale are defining features and made us masters of the world. A global view also suggests that sharing’s importance will grow in the future. We’re nearly eight billion people on one planet with finite resources, using more resources per year than the earth can replace since the 1970s. This can’t continue. The negative impacts are already a harsh daily reality, yet the needs of a growing population need to be met. Such a perspective makes it clear we must share better.

Indeed, sharing is both a survival and moral imperative. As Buckminster Fuller said, our responsibility is to “make the world work for 100% of humanity, in the shortest time possible, through spontaneous cooperation, without ecological offense or the disadvantage of anyone.”

If the promise of the sharing economy remains, what might its shape take? Below are five areas where I see potential for an expansion of the paradigm.

Real estate: From green to social building

How to Launch a Behavior-Change Revolution documents a telling encounter between Daniel Kahneman, who won a Nobel Prize for his behavioral economics work, and a group of psychologists planning society-scale behavior change. He bursts everyone’s bubble by saying the best way to change behavior “is almost always by controlling the environment... making it easier.” In other words, it’s more effective to create an environment that leads to certain behaviour changes than to push someone to make them: reducing the barriers to change, not increasing the incentives.

This is the kernel for my thesis that real estate may be the biggest of all sharing opportunities. The built environment is a mold which powerfully shapes human behavior, and can help us share maybe more than anything. By 2050, nearly 70% of the global population will be living in cities and 75% of the infrastructure that will exist then doesn’t today. Lots will be built and must be built differently if we’re to avoid the worst effects of climate change. Coworking, now a $26 billion industry, was the first hint real estate could lead the sharing economy. Coliving followed, and now mega-projects are being built around the world, including the largest ever in Silicon Valley.

Lund University’s Sharing Cities Sweden is taking things to the next level by building sharing neighborhoods in four cities. The goal is to blend green building and the sharing economy to support healthy, communal, low carbon lifestyles. LabGov is thinking big too, conceiving of entire cities as shared assets requiring multi-stakeholder governance; check out their co-city protocol for inspiration. Hundreds of cities around the world are adopting Sharing Cities and urban commons as development frameworks.

Sharing and climate change

Before a 2018 C40 report, cities focused on greenhouse gas (GHGs) emissions primarily from transportation and buildings rather than from urban consumption: understandably, this was easier to measure. However, the report found that C40 member cities “have a 60% larger carbon footprint than previously estimated.” The report put a spotlight on the role everyday consumption plays in climate change and opened a window of opportunity for sharing to take center stage with more traditional solutions.

In 2019, C40 released a follow-up report estimating urban consumption-based GHGs must be cut by 50% by 2030 to keep global temperature rise to below 1.5C, and outlined how cities can do it. “The consumption interventions will both require significant changes to consumer patterns and individual behaviours,” it stated. “C40 cities can affect what and how goods and services are bought, sold, used, shared and re-used all over the world.” The report highlighted new clothing purchases, food system change, and reducing car ownership as top sources of reductions – all areas ripe for sharing.

Sharing has long been touted as an environmental solution, but C40’s work put it on the agenda at an institutional level. Again, Sharing Cities Sweden is an example of a large-scale, institutionally-supported application of sharing to meet climate goals, pointing to dramatically more governmental and philanthropic support of sharing in the future.

Platform cooperatives

My organization, Shareable, helped put platform cooperatives on the map with a 2011 feature describing a new form of organization, combining platform technology with a cooperative business structure. This allowed those creating value on a platform to own and control it – a remedy for exploitative, tightly controlled platforms like Uber.

Today, it’s a global phenomenon with thousands of companies in dozens of industries. Some are on sound footing: Stocksy United (stock photos), Up and Go (home cleaning) and Savvy Cooperative (patient data); others like Fairmondo (coop eBay), Resonate (music streaming) and Fairbnb (hospitality) are in development or have limited market penetration.

Platform businesses are tough, though the technology gets cheaper and easier to use by the day – entrepreneurs can create a beta version in a matter of hours with nominal cost. There are 300 million co-ops worldwide with over $2 trillion in annual turnover who can take advantage of such simplicity.

Moreover there’s enormous pressure for the sector to digitize: there is no Silicon Valley equivalent yet, which the Platform Cooperative Consortium (PCC) is trying to change. They provide ecosystem support to help grow the sector, including a recent online class for 800 students from over 50 countries. They’re yet to crack the toughest nut – adequately financing to achieve scale – but are on the hunt. We’ll know they’ve been successful when there’s a platform co-op that’s a household name.

Local ecosystems for grassroots sharing projects

Grassroots level sharing is far from new. Timebanking, community gardens, tool libraries, maker spaces, community currencies and more are beloved local institutions, but frequently suffer from inadequate resources. Enter the ecosystem strategy, whereby an umbrella entity organizes a project to increase stability and impact.

Examples include collaborative city councils like Frome Town Council supporting community projects through fundraising, grants, training and volunteer sourcing, IOBY, a platform that helps projects crowdsource financial and practical support, and Bologna’s urban commons, which has written citizen-led projects into the law, allowing hundreds of local groups from co-op schools to public park stakeholders to form “collaboration pacts” with the city government outlining how citizens and city will work together.

In the London Borough of Barking and Dagenham, the Everyone, Everyday project combines storefronts, community organizing, multichannel communication and wraparound support to help projects succeed and increase civic engagement in the area. Its rigorous approach to lowering barriers to participation and impact measurement, plus effective branding, has attracted several million pounds in funding. It’s one to watch.

We should see more of this going forward as cities reach beyond the limits of their declining budgets to meet the growing need for their services. Residents are their ace in the hole.

The blockchain sharing economy

This is the bleeding edge of the bunch, with a future ranging from total bust to total disruption. There are blockchain sharing economy ventures, protocols to build them, plus a few new wrinkles that the blockchain technology enables. The promise is a better deal for users in terms of fees and terms, as well as greater security and data ownership (the latter a perennial bugbear in the platform economy).

Examples include Arcade City (ridesharing), Tesseract (fractional ownership of vehicles), Keepgo (cell data sharing), Filecoin (decentralized cloud storage), Streamr (share data revenue), Brooklyn Microgrid (energy marketplace for local solar power), and many more depending on how broad your definition. In fact, some might argue that much of the sector is a sharing economy, as a key purpose is to distribute control and value to users.

There would be more direct examples, but there’s already been a mini boom and bust, with many coming and going quickly. One company, Beenest, raised $15 million and disappeared with little explanation – not an unusual story in this space.

Examples of protocols intended to help entrepreneurs build sharing economy apps include ShareRing, Time Coin Protocol, and Holochain. They hold promise for a second, more successful wave of blockchain sharing economy startups. But there appears to be no breakout apps from them yet.