Today the world’s largest hospitality brand, Airbnb, is worth over $25 billion without owning a single room or hotel. Likewise, Uber, the world’s largest taxi service, is valued at over $62 billion without owning a single car. The continued, rapid growth of the Collaborative Economy makes it clear that sharing is not a fad. How can companies embrace this concept in how they offer their customers products and services? We spoke with Silicon Valley’s Jeremiah Owyang, industry analyst and founder of Crowd Companies. Owyang will be moderating a roundtable discussion on the sharing economy at Dassault Systemes’ upcoming 3DEXPERIENCE FORUM in Santa Clara on November 10th.
Q. Jeremiah, can you talk about the Collaborative Economy, what economic trends are fueling its growth?
Jeremiah Owyang: The Collaborative Economy is a movement, one where people use commonly available technologies to get what they want. It’s not just limited to cars and homes, they are sharing money, goods, time, and anything else you can imagine. The impact to every industry is only growing, from healthcare, to logistics and beyond. In fact, check out the popular Collaborative Economy Honeycomb graphic which we created which shows a broad overview of this market. There are three reasons this movement is happening: societal trends, economic factors, and technological enablers. From a societal perspective, a focus on sustainability, millennial behavior and urbanization have all pushed this forward. From an economic factor this movement pushed forward during the trough of the 2008 recession where people want to generate revenue from their unused assets. Lastly, technology has enabled this – from internet of things, mobile devices, social networks, ratings and reviews, mobile payments and more. Learn more about these three factors here.
Q. How can larger, or legacy companies adapt their current businesses to take advantage of this trend?
Jeremiah Owyang: Absolutely, we are seeing many large companies changing their business models to adapt to this collaborative future. For example, BMW is now making their cars available as a membership model, like a rental model, instead of selling them outright – in Germany this program is profitable. Whole Foods is partnering with crowd based delivery startups like Instacart and has seen an increase in bottom line revenues. And Hallmark has embraced the maker movement, by reselling and featuring maker goods at their own stores and online storefront
For companies to make these herculean changes the real challenge isn’t about adopting technology, but internal cultural limitations. Corporations have found that the ‘middle layer’ of the company that is responsible for quarterly revenue goals doesn’t have time, or dismisses the need to change – this leaves corporations in a significantly vulnerable position as startups continue to grow and innovate at a rapid pace.
Q. How does the consumer ultimately benefit from this new way of doing business?
Jeremiah Owyang: Now, and increasingly in the future, people are moving towards an “access over ownership” model, where people can get things on demand, rather than have to own items, goods, cars and homes. This means that people now have a greater variety of goods and services, rather than just focus on having to own and manage their own items.