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Jeremiah Owyang: Profiting from a Collaborative Economy

Jan 2 2014, 2:11pm CST | by

Jeremiah Owyang: Profiting from a Collaborative Economy
Photo Credit: Forbes
 
 
 

It’s being called the “Sharing Economy,” “Mesh Economy, ”  “Collaborative Consumption,” and now the “Collaborative Economy.”

Whatever term prevails, it’s about a more efficient way of using valuable resources to benefit people, business and the planet.

It is a movement based on the farmer’s collectives of simpler times; the anger fomented at the beginning of the recession; an emerging generation of New Urbanists, by technology that allows you to know who can be trusted worldwide, and the realization that relentless depleting of resources is exhausting the planet that supports us..

That anger exploded when  an ad hoc, grassroots organization called Occupy, clogged Wall Street, which they considered to be the epicenter of the profiteering. They squatted in homes made vacant by bankers, who profited as they pushed families who had moved in with home and were pushed out in despair. Only a minority of the public seemed to support the group’s confrontational tactics, but a great many sympathized with their point of view that few were profiting while many were being hurt.

Since Occupy,  a great deal has happened. Individuals and organizations are finding ways to make better use of valuable resources that have remained idle during tough economic times. Access is being made affordable to those who previously could not pay for hotel rooms, a rented car, a vacation yacht, one-of-a-kind jewelry,  a gourmet meal served in a private room, or industrial or commercial space for a nascent company. In all these cases sharing or collaboration is involved. So is modern technology such as mobile, social media, sensor, data and location.

Perhaps it’s all a temporary phenomenon, festered by the lingering remnants of the most persistent economic downturn in 65 years; perhaps it is representative of a permanent new way of doing business. The evidence seems to be pointing toward the latter, and  many experts see it as sufficiently significant as to be defined as a new economy, one likely to disrupt many aspects of the old one.

Arun Sundararajan, who teaches at NYU’s Stern School of Business, recently told announced he is compiling statistics on this leaner, more efficient kind of consumption. He hopes to release his findings later this year.

Altimeter Group, a research, analysis and consulting firm based in San Mateo, CA reported last year that there has already been $2 billion in funding  new companies aspiring to play in the new economy, some of it from Kickstarter, some from traditional early phase investors and some of it from the very one percent of companies that spawned the Occupy protests of 2008.

The author of that report, Jeremiah Owyang  has become so impressed with the movement’s scope that last month he stepped out of Altimeter to found Crowd Companies,  serving what he calls the “Collaborative Economy,” a term he favors because he says it appeals more to the traditional enterprises that he primarily serves.

“I’m doing this to help major brands connect with customers using the new contextual technologies,” he told me.

At the core of Crowd Companies is a professional association called the Brand Council. Owyang has already attracted 24 founding members including such established behemoths as Walmart, GE, Ford, Nestle, Verizon, Hyatt, Intel and Verizon and he is working on recruiting more.

Owyang, and his Brand Council members, are hardly the sorts to join hands around a campfire and sing Kumbaya. For them, there is a realization that the economics of their business have changed and so have the tools. They are willing to pay an annual fee for a private venue where members can talk with each other and hear presentations from topical experts as well as  have access to an “Innovation Network” of startups, formed by Owyang.

Owyang’s network is comprised mostly of little known startups who aspire to emulate the nearly untrammelled successes of early movers such as Uber, AirBnB and Lyft. Each of these new powerhouses are under five years old; all are worth billions of dollars and serve millions of customers. They are already too far along to need associations with Owyang’s Brand Council.

For example, AirBnB predicts it will become eclipse Hilton to become the world’s largest hotelier sometime in 2014, although the five-year-old company doesn’t own a single piece of commercial property—not even a bed.  Lending Club , a peer-to-peer financial institution, has invested $2.6 billion dollars in makers, ideas and people. It may not yet be the best-known lending institution, but if you do an online scan for customer feedback, it may be the most trusted. The only people who seem to distrust Uber, are the taxi companies feeling the shark-like bite of their competition. It is being criticized for alleged price gouging , but that perhaps is why so many other ride sharing enterprises have started up.

Owyang’s Innovation Network is comprised of a new wave of promising companies, some of which are seeing business opportunities where they could not have existed until online trust systems started being developed through services like eBay, social media, Yelp and other recommendation services.

The growing Innovation Network roster includes   Feastly    and Cookening, who allow erstwhile chefs to bring guests into their homes or to visit yours; Techshop, a chain of urban entrepreneurs financed in part by Ford and AutodeskYerdle, an online marketplace of free stuff, and Shapeways, a marketplace for 3D printed goods. Innovation Network members can share experiences and insights with each other, but they also have the opportunity to team up with Brand Council.

A few partnerships have already formed. Lowe’s Home Improvement Stores, a Brand Council member, provides space to the Austin Techshop. The Techshop entrepreneurs buy materials at a discount from Lowe’s, and have an opportunity to develop products that may have access to Lowe’s retail shelves.

Such partnerships were already starting before Owyang formed Crowd Companies. GE and Ford both partner with Quirky, an “idea community”, on a variety of projects. Lincoln car owners can purchase inexpensive jewelry designed to match the cars they purchase. Etsy, a global community of artists and artisans, supplies Nordstrom’s with individually created items.

By using Crowd Companies to  form both the Brand Council, and the Innovation Network, Owyang may be creating a new and huge online marketplace, where he just might emerge as the de facto impresario.

While people have been bartering, forming collectives, helping each other for centuries, there is something new and different going on today. Back in simpler times, these acts of sharing and collaboration all took place on the community level, where people knew each other by reputation and knew who to trust in business or confidences. Now it can go global and work in real time.

Owyang points to mobile technologies, sensors, location technologies and data—the forces Robert Scoble  and I recently wrote about in our Age of Context book.

“This new movement could not have taken hold if we had not entered the new era. It is a direct result of contextual technologies at a time when the world needs to change for both economic and social reasons,” he told me.

The technology allows people to see where resources such as a place to stay, a car to share, a pet sitter, an aspiring chef, inexpensive office space or executive assistance can be found and used for a time.

It accelerated in the recession from which the world is striving to recover, but the economics of sharing existing resources seems to me to be  likely to endure.

If affluence returns, fewer people may want to share their boats or spare office space, but tapping natural resources is getting far too close to getting blood from a stone.

“I’m no tree hugger,” Owyang said, “but we simply cannot sustain ourselves at the current rate.  The planet simply cannot support it.”

A 2012 Popular Science article confirms that observation. It notes that Americans make up five percent of the world’s population, but use 20 percent of the world’s energy and produce 40 percent of the world’s garbage. More Americans have their own cars than in any other country. Yet those cars sit idle 95 percent of the time.

To sustain this planet at our current rate of consumption, the article said, would require humans to have four planets the size of Earth.

If the current generation does not yet grasp it, coming generations do—and so do enterprise thinkers who take the long view. In researching Age of Context, we found a considerable amount of research showing young people prefer owning smartphones to owning cars.

At Ford, we learned that company strategists see a future when fewer Americans want to own their own vehicles, particularly the new urbanists who chose to live, work and raise families in cities.  It would explain why Ford has dropped its investment in Avis, while investing in Zipcar, Lyft and Techshop.

I believe this new sense of sharing will have a rapid, favorable impact on all aspects of the economy: people-to-people; business-to-business, and business to consumers.

The only issue I have is that there seem to be too many names for it and all movements need to be named.  The term “social media,” did not exist when Scoble and I wrote Naked Conversations. We had to keep saying, “blogs, podcasts, vlogs and wikis,” which was awkward and downright cumbersome as new social tools emerged. “Social media,” was not the precise term, but at least we had something that all people understood and used.

Perhaps, Owyang will be right and it will be called the Collaborative Economy because business likes it better. Perhaps the Sharing Economy will prevail because people like it better—so far.

Perhaps there is room for something new that everyone will embrace. Personally, both terms miss the key components of trust and technology.

Hopefully, something new will emerge and the sooner that happens the better, or so it seems to me.

Source: Forbes

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