How to Launch a Business in the Sharing Economy
As a tech executive who often traveled on business, Aaron Easterly was constantly asking friends and family to care for Caramel, his beloved Pomeranian. “I would never take her to a kennel, so I’d go frantically down the list of family, friends and neighbors every time a business trip came up,” he says. “This was just one of those areas that felt frustratingly broken.”
Intrigued by the growing popularity of peer-to-peer platforms like Airbnb and Uber, Easterly sensed that there was an untapped market for other dog owners who didn’t wish to utilize commercial kennels or daycare services.
In 2011 he launched Seattle-based Rover, which connects pet owners needing boarding or sitting services with a network of prescreened dog lovers for hire. Today, Rover has roughly 25,000 approved sitters in more than 5,000 U.S. cities.
Easterly is not alone. After seeing how Airbnb and Uber can turn any house into a hotel and any car into a cab, many entrepreneurs have been hoping to discover the next peer-to-peer market—one they can leverage to enable members to monetize not just their possessions, but also their resources, talents and passions.
Beth Buczynski, author of Sharing Is Good. How to Save Money, Time and Resources Through Collaborative Consumption, credits the growing popularity of sharing-economy startups to a consumer base that’s fed up with corporate domination and has shifted its values toward more mindful choices.
“We’re choosing to support people-minded companies and products that provide real value, prioritize efficiency, slash waste and cultivate solutions,” she says. “We’re finding this in peer-to-peer models that cut out the middle man and allow us direct access to each other and the goods or services we need.
“We realize we don’t each need a cordless drill sitting on a shelf in the garage gathering dust,” she adds. “What we do need is access to that drill for the 30 minutes when we’re putting a bookcase together. In the meantime, why shouldn’t it be available to others?”
Two essential elements of successful peer-to-peer ventures are community and density. “[These businesses don’t] work without people who care, are committed to the behavior and trust each other,” Buczynski says. “And sharing is easiest when the space between us is smallest. That’s why cities like San Francisco and New York have become hotbeds of peer-to-peer sharing.”
Think you know what will be the Airbnb of fill-in-the-blank? Relying on independent contractors to deliver the experience and service you need to succeed takes careful planning and execution—much of it different from that of traditional businesses. Whether it’s dog-sitting or car rental or handyman services, the launch of a successful peer-to-peer platform depends on sharp screening, extensive training and streamlined delivery.
“Take the time to look for real problems that need real solutions—problems that can be best solved by communities themselves,” Buczynski advises. “Then provide the infrastructure so they can.”
Here are some factors to consider.
1. Start with supply.
While many entrepreneurs assume that identifying (or creating) robust demand is the first requirement of a viable peer-to-peer launch, it’s equally important to cultivate a ready stable of suppliers, says Jamie Viggiano, vice president of marketing at San Francisco-based TaskRabbit, which enables users to outsource household errands.
“You need to get the supply infrastructure in place before you can push the demand side, and make sure the market is in equilibrium,” Viggiano says. Her company targets prospective suppliers (known as “Taskers”) through Facebook and Google advertising focused on the company’s core demographic and ZIP codes.
The same principle applies to scaling, she notes. Before TaskRabbit considers expanding into a new city, it ensures that the necessary suppliers are there.
“We typically have hundreds of interested Taskers who have signed up for the service prior to launching in a city, and we make sure in every ZIP code the supply and demand are at an equilibrium,” she says, noting that since TaskRabbit captures email addresses and ZIP codes from interested and potential participants, it’s a fairly easy process.
Kevin Petrovic, president and co-founder of San Francisco-based FlightCar, hasn’t found it so easy. His service, which allows outbound car owners to rent their cars to incoming travelers at the same airport, markets differently to each side of the equation.
Since launching in 2013 in Boston and raising a total of $20 million in venture capital, Petrovic and his team have discovered that paid acquisition is the best avenue for securing renters, whether it’s through search and display advertising or through third parties like rental search aggregators. To build a supply of car owners, however, FlightCar seeks public relations and press opportunities, as well as word-of-mouth through referral programs.
“Building the peer-to-peer component is all about understanding different ways to market to people so you can feed the marketplace on both sides,” he says.
2. Conduct extensive screening and training.
As inclusive and socially positive as the sharing-economy ideology may seem, not everyone who applies will be a good fit for your business. Even though they’re not your employees, your providers are the face of your business, so it’s crucial to train them accordingly.
Rover uses a multitiered review and onboarding process that includes references, optional background checks and verification of social media accounts; online training and exams; and a manual review that determines whether every
applicant has a good plan and environment for dog-sitting, as well as whether they have the personality and experience to maintain an appropriate level of customer service.
Once sitters are accepted into the program, Rover collects data on responsiveness, repeat assignments and photo shares to confirm the sitters are representing the business in a way that aligns with its mission.
Another company, Bellhops, a moving service that contracts students, targets potential movers via reputable student organizations such as ROTC and sports teams, says co-founder and chairman Cameron Doody. The Chattanooga, Tenn.-based company has a network of 10,000 movers operating in 136 cities.
Once recruited, prospective candidates complete an online application with both written and video components, which are then screened and, if approved, forwarded to company headquarters. There, the candidates are reviewed again and, upon approval, receive a confirmation email asking them to log in and build their profile. After that, they must view 12 online training videos and take tests on what they’ve learned.
“They’re on the front line, so it’s all about integrating our culture and what we expect from our Bellhops,” Doody says. “As soon as they complete that process, they get access to the job board and can begin receiving invitations to start picking up jobs.”
3. Foster trust.
It can be difficult to build trust with customers via an online platform. To ease pet owners’ worries about their four-legged family members, Rover offers 24/7 veterinarian consultations, premium pet insurance and the ability to share photos and music videos of sitters interacting with their canine guests.
“We do that to make sure the user experience is phenomenal and make sure that people get updates showing their dog is having a good time, which puts their mind at ease,” Easterly says.
Positive online reviews and ratings are also crucial for gaining consumer trust and generating leads. Indeed, transparency is everything in the peer-to-peer world. The Rover website even has a live-feed “RoverCam” showing all the action at the dog-friendly company headquarters.
It’s also key to generate trust on the supply side. Unforeseeable factors combined with the remote nature of peer-to-peer businesses make extensive commercial insurance a must, insiders agree.
FlightCar has $1 million in liability insurance for the owners of the cars rented through its platform to protect them against any damage that might occur while the car is being rented.
“When you have cars and people driving, you always have to account for the worst-case scenario,” Petrovic says. “That’s what insurance protection is all about.”
4. Keep payments simple.
Nothing makes Doody cringe quite like dealing with paperwork and cash. In addition to being a crucial part of Bellhops’ mission of reducing the cost and pain of small-scale moving, he contends that a hassle-free payment process is critical to the success of any sharing-economy operation.
“It’s all about automation, so you’re going to want to streamline it as much as possible,” Doody says, noting that Bellhops does not accept cash. “If we were to take cash, how would we handle that cash, and how would we get it back to the company? All of that paperwork can be mitigated through technology today.”
The entire process is paperless and automated. Customers book with a small deposit on their card; the Bellhops arrive and clock in on their smartphones, then clock out when finished.
Immediately after the move, the customer receives a text or an email with a link to verify the reported time, allocate tips and give quick performance reviews. After verifying, anything owed past the initial deposit is automatically charged to the customer’s card, and wages for the Bellhops are created. “Closing everything out takes about 10 seconds,” Doody says.
Rover keeps payments equally simple for customers with a flat fee—no tipping—that’s paid through the online platform. Sitters receive their wages via PayPal, credit card or check.
5. Focus on brand-building.
By nature, a successful peer-to-peer service has a built-in community of people who are engaging with and talking about it. Smart entrepreneurs will harness this momentum to develop a more robust brand, enhanced by the availability of compelling content.
“People build our brand for us almost a thousand times a day around the world when they drop the #besomebody hashtag,” says Kash Shaikh, founder of Austin-based Besomebody, a “platform for passion” that connects people based on their shared passions. “Content can build a brand for you and can also help you scale that brand,” says Shaikh, who launched the company in June 2014 after receiving $1 million in seed funding from the E.W. Scripps Company.
Besomebody creates video and photo content of its so-called “Passionaries” unleashing their passions in areas ranging from fitness to photography to hip-hop; users can explore this content on curated topic feeds and connect with others who have similar passions for information or monetized lessons and instruction from local Passionaries.
Shaikh says Besomebody reaches almost 5 million people per month in 180 countries through 12 social media channels. “We curate and create the best high-quality content that’s motivating and makes people feel inspired,” he says. “And that builds the brand for us.”