| Dear Brands,
I just got disrupted. I willingly let a stranger drive off in my car, and I found it unnerving. Last week I wrote a heartfelt letter to you that our relationship has changed. I shared that I don’t want to breakup, but I want to have an open relationship. I don’t want to buy products. I want to rent, borrow, share, or swap products. The world has changed, and with it, our relationship. Brands are being disrupted by sharing. I know that it’s discomforting to hear that customers are now buying your products once, and then sharing many times with each other, because it means that your revenues will diminish. This movement, called the Collaborative Economy (see all my posts on this topic) is on the rise, so I decided to go through the experiment, so I could feel what you’re going through. I put my own family assets at risk just to feel disrupted. I put our cherished family car up for rental on RelayRide, a site that allows people to share their cars with neighbors. As the first person to own this car, I have an attachment to it, and have taken rather good care of it for many years. Saturday morning, a young Duke University student picked it up from me for the weekend. I didn’t know who he was, nor do we have any shared contacts. While RelayRide promised me that they screen renters and provide insurance, I couldn’t but help see a piece of me leaving as he drove off. It felt unnerving on many levels. First, I allowed a complete stranger to take my asset. I asked myself, “What’s he doing with it? Will it come back in the same condition? What about liabilities, such as accidents, traffic or unaccounted bridge tolls? Second, I was unnerved, because my training to be a good capitalist in business school did not prepare me for this new business model. Third, I worried about what my current insurance company would think. Finally, it was unnerving because most of our clients at the company that I own serves brands, i.e., I make money from those brands. The good news is that everything was just fine. This morning I woke up and there was the car, parked at the curb as agreed. My keys were left in my mail slot and now I’m $50 richer. So what did I learn? This new collaborative economy requires trust. Trust to let go and trust that the startups that you partner with, and their customers, are trustworthy. This is just the start. To take this experience a step further, I’m renting the car out for weeks, and then for two months starting in July. Business models, as we know them, are about to change. Now back to you brands. While I chose to be self-disrupted, for many brands you won’t get a choice. This disruption is already among us. There are over 200 startups that empower consumers to buy once and share many times without buying again. Some of you will adopt this trend and change your business model. Some of you will not and, thereby, risk disruption. In either scenario, you will be unnerved, just as I was. The collaborative economy is unnerving, but we will explore it together. Jeremiah Owyang |
This could help improve product quality and get us away from being a throw-away society. It could also improve price points for brands if durability gets valued more. That could happen if consumers demand that products they buy hold up to the abuse delivered by renters. In the meantime, if products don’t hold up to treatment by renters, the “collaborative economy” might create more waste.
David, correct.
The Collaborative Economy movement has 13 distinct attributes that are driving 3 major forces: Social, Economic, and Technological.
Part of this story is a sustainability model, but for some, it’s just about saving money, or for those that rent, empowerment.
http://www.web-strategist.com/blog/2013/05/09/the-three-market-drivers-causes-for-the-collaborative-economy/
Currently, the idea of owning might be losing ground to the idea of renting (i.e. a renter’s market) Eventually, equilibrium in The Collaborative Economy will adjust to more fairly compensate owners for the costs of ownership that include the costs of renting. I can see how this is collaborative and disruptive because there are new groups of owners and renters who impose new demands on the products and have new expectations of each other.
Excellent point about trust. Two questions for you — if you were somehow connected to this person, either 2 or 3 degrees away, would you feel better? Or even better, would you be willing to provide a discount to someone in whom you had higher trust? If that were to happen, we could actually see a way to measure the value of trust within this new economy. After all, collaboration requires trust, and none more so than when your personal assets, career, or relationships are on the line.
Love this Charlene. Measure trust and possibly segment by item. I trust your friends with my car and i trust Jeremiah’s with my house, which will help unlock influence in the real sense perhaps
The other consideration is that consumers are now becoming ‘like’ a business. Now imagine that at exponential growth and how the world changes.
I sense confusion in this article about the value of brands versus corporate concerns over sales. The collaborative economy may in fact strengthen brands, since your client will value not only a well-kept car that is affordable and conveniently close, but also a brand that promises safety, fuel economy, reliability etc. The features of the product are not undermined by sharing. Remember also, that your car will wear out quicker now that it is being used more often. That may result in the manufacturer selling replacements more often than before, even if it sells fewer overall.
Scooterech. Yes, the brand will last longer, but frequent sales to consumers is potentially going to decrease. The business model depends, for example, auto manufactures may have decreased auto parts being sold if 3D printing is on rise. Lots of changes to ecosystem.
Charlene. Yes! RelayRide lacks a socialgraph feature that I could experience on my instance. AirBnb has a socialgraph, you can see which home is owned by a first degree contact or a friend of a friend (Foaf) and hopefully they would see the same for renters.
Correct, you hit a big area of the insights is trust is required.
Why thank you Jeremy!
I’m far too attached to my car to do this form of collaborative economy, but I congratulate you on your ability to see the benefit and experience of this new world. Maybe I’ll loan someone a power tool or bike.
Thanks Chris. For me, sharing my car was pushing me to the limit, as I know of the liabilities and risks involved.
I think the “risk” thing will keep this collaborative activity relegated to only a certain percentage of the population. When I rent a car from Hertz or Avis, I know that it is inspected regularly, and I can be reasonably certain that the brakes will work when I press the pedal. That’s not the case with a car from RelayRide, but it’s what makes ZipCar a safe bet. When I hail a cab or hire a town car, I can be reasonably certain that the person driving has some kind of licensing, won’t be impaired, will have a safe vehicle, and drives safely. Not necessarily the case with Lyft, which I expect to see on the receiving end of legal action from regulatory agencies in the near future on the grounds that they’re operating an unlicensed taxi service. Similar things can be said for AirBNB, or anything else related to personally-owned items (excluding software). There’s a certain “ick” factor that many people feel about using other people’s stuff, or letting other people use your stuff. While a lot of this might work in San Francisco or NYC, how is it going to play in Peoria?
It’s encouraging to think that we, as a society, will become much less emotionally attached to the actual objects we own and will focus more on the utility/value those things provide to both ourselves and, now, others.
After all, it’s just a car 🙂
Here’s a few more for your master list:
BorrowMe.com (neighborhood share)
CapitalBikeShare.com (WDC-area)
An unforecastable trend, it would seem. I wonder if anti-poverty groups are looking at this technology; seems like a natural fit. The money we save on cars, we can invest in the personal robots that are coming down the pike. 😉