Amazon’s rise from modest online book seller to $193B retail (and cloud hosting) disruptor is well documented. But for all that obsessive customer-first thinking - free shipping, easy returns, extreme convenience - the end result for many consumers is buying a bunch of crap they may or may not need.
I’m no stranger to said crap. A cast iron skillet and backpacking hammock are two of the many impulse buys I’ve executed for things I’ve never actually used.
Fortunately, I’ve dropped that habit. Between moving from DC to Wisconsin for school, and most recently following my girlfriend to San Francisco with just a couple bags of essentials, there’s been a lot of downsizing.
It’s helped me realize that I don’t need to own stuff to do the things I want, and embrace alternative options for using stuff to do things instead of owning stuff because I’ll want to do a thing someday.
Sharing Economy 1.0
It’s easy not to own a car because of Uber/Lyft/Zipcar, and to a lesser degree, public transportation. You don’t need to own a bike for occasional use because of the gazillions of bikeshare startups.
And if you do feel the need to own these things, you can offset the cost. Drive for Uber/Lyft, rent your bike on Spinlister, etc.
But for these massive successes, there were a number of follow-on failures. Frictionless P2P business models and the promise of the sharing economy arguably reached its apex a few years ago.
Consumers were introduced to the option of not needing to own expensive assets that depreciate quickly. VCs lusted after highly scalable business models that reduced company asset ownership and substituted salaried employees for less expensive contract labor.
It turns out, these P2P marketplaces were high on idealism but low on pragmatism. Many of the failures of Rentabilities, Neighborgoods, and SnapGoods (good third-person post-mortem here), suffered from one-sided supply/demand.
Just because you have a lot of idle crap in your garage, doesn’t mean your neighbors want to rent it. Plus, the idea of being neighborly and being part of community gets soured when your neighbor wants to charge you $5 to rent a power drill.
Sharing Economy 2.0
In some spots, there was - and still is - demand for alternative ownership models.
What doomed these startups was the obsession with business models relying on minimal to zero asset ownership.
The assetless model wet the appetites of VCs in search of 50x returns but ignored what could be a very profitable, sustainable business model.
Fortunately, a handful of forward-thinking startups have embraced full ownership of the supply-side and, in the case of Joymode and Grover, have recent Series A rounds to give it a go.
There’s a few themes here to be concious of:
Europe first - the US is very much built on a consumption-driven economy. We like to own things. Europe, however, feels more open-minded when it comes to evolving business models to fit changing societal needs - and is more progressive in general. At the risk of making a sweeping generalization, it would make sense to see this business model take off in Europe before the US.
Recession-oriented demand - we’re due for another recession, but even when times are tough, people need R&R. That R&R just needs to be more affordable. Renting instead of owning solves that problem.
Widening income gap - the expanding income equality in the US is a problem, but could be a boon for rental-based businesses.
These are early stage ventures, still looking for product-market fit and finalizing what the right business model will be, but I’m optimistic this could be a thing.
What do you think?
