3 Lessons Learned From the Sharing Economy
Apply now to be an Entrepreneur 360™ company. Let us tell the world your success story. Get Started »
We are all familiar with the Uber’s and Airbnb’s of the world that make up the “sharing economy,” better defined as the socio-economic system built around the sharing of human and physical resources. These companies have created a shift away from ownership by giving people the ability to share access to products and services.
Whether that’s sharing a ride using an app, or booking a room in someone’s apartment while on a vacation, these companies are growing exponentially. A few have billion-dollar valuations. Although the sharing economy is different from the traditional mode of goods and services for sale, budding entrepreneurs can learn fundamental business lessons from the success of these companies.
1. Don’t be afraid to pivot. Uber is one of the darlings of the sharing economy. In June, the company landed a $17 billion valuation after a $1.2 billion series D round.
While most users know Uber as on-demand car service, the company’s roots actually stem from the luxury transportation industry. The founders envisioned an on-demand service that would instantly connect users with black cars in their area, thus eliminating the need to hail cabs. While the black car service is still a part of Uber’s offerings, recent years has seen a dramatic spike in usage of their “Uber X” service that competes with local cab services by offering a cheaper, more convenient option for city-dwellers.
You’d be hard-pressed to find a person in a major city (SF, NY, DC) who hasn’t used Uber X. While Uber’s founders created the company with luxury in mind, they saw an enormous opportunity offering an alternative to traditional taxi services. Despite luxury transportation being the backbone of Uber, the founder’s weren’t afraid to pivot and change the focus of the company.
Taking risks is a huge part of founding a successful business. Be confident enough to change your company’s focus when you see the opportunity. It may prove the key to success.
2. Look to your predecessors and learn from them. Airbnb was one of the first companies to discover that there was money to be made in space-sharing. As one of the pioneers of collaborative consumption, other companies have looked to Airbnb as an example of how to make money off something – like a room in your house – which they already own.
One such company is Roost, a peer-to-peer marketplace for self-storage. The idea for Roost came when CEO Jon Gillon’s brother asked to store some boxes in Jon’s closet following a move from Austin. When Jon’s brother called to pick up his belongings, the idea for Roost was born.
The founders of Roost realized that renting out your house, a la Airbnb, isn’t the only way to monetize your space but they used them as a model for their own collaborative consumption business model. When building a company, it’s important to see what has and hasn’t worked before you. Learn from from those who paved the way.
3. Explore new markets. The next generation of sharing economy companies has begun to emerge targeting the enterprise market. Portable computing and the cloud have made it possible for employees to work whenever and wherever they want. Mobility and choice have given employees a new sense of freedom in the workplace that has created an entirely new set of challenges.
With many employees now working remotely, many companies find that it’s no longer necessary to have a traditional office but where do you a client or a meeting for your team? Enter a company like LiquidSpace that offers meeting rooms and office rentals booked hourly or daily.
If your company needs a project completed, but doesn’t have the right internal team for the job, you can turn to a company like oDesk, an online marketplace for freelancers. Businesses post jobs and the community submits their portfolios for consideration. A company like oDesk gives businesses greater flexibility when it comes to staffing and ultimately helps them do more with less.
Both oDesk and LiquidSpace realized that the enterprise was ripe for the picking. They looked at overarching trends and found problems that needed to be solved. As technology continues to improve mobility and choice, new challenges will emerge. The companies that address these needs early will be the ones who thrive.
Uber and Roost are examples of sharing economy companies that learned valuable lessons on the road to success. LiquidSpace and oDesk are examples of sharing economy companies that are addressing the growing needs of enterprise. When developing a business, it’s important to take risks but change direction when needed. Look to growing markets, recognize their challenges and find ways to address them. Learn from the companies that came before you and identify what worked and what didn’t. Their growing pains might help you avoid mistakes and put you on a more stable road to success.