Without a doubt, the Sharing Economy has gained tremendous ground in the last few years. By 2025, it is estimated that this rising star will reach no less than $335 billion in sales (whereas in 2013, businesses in this sector scored an exciting, yet modest $15 billion in sales).
How did we get here, though? Why are people so happy to participate in the Sharing Economy, and what are the steps that got us here?
The Original Entrepreneurs | Story Time!
It all started about 17,000 years ago (promise this will not be that long a story).
It’s hard to imagine entrepreneurship and business 17,000 years ago. Before you let your Flintstone’s imagination run wild, though, let’s make things clear: the Stone Age took off 2.6 million years ago, so by the time the first businesses started to crop, mankind was long past sticks and stones.
The first traces of barter go back to New Guinea approximately 17 millennia ago, when people traded obsidian (used to create hunting tools) for other tools, skins, and products hunter-gatherers found pretty cool back then. It was all about the bleeding-edge technology, you see…
For many thousands of years, business resumed to just this. Bartering from one caveman to another, objects, tools, and equipment found their own distribution model. There were no complicated unique selling propositions, no minimum viable products, and marketing was pretty much a word-of-mouth thing.
The agricultural revolution brought a new perspective in play: it pushed people into specializations. Before settling down, humans were mostly split in two: hunters and gatherers. But once they started growing their own crops and farmstock, humans also started to become specialists in the various verticals of their ancient economy.
Some were good at building tools. Others were good at fishing. And others were masters of making clothes. Things were mostly local, though – so the main business model relied on pretty much just making stuff.
About 3,000 BCE, trade routes began to open. Africa traded salt to the Roman Empire, Arabia traded lemons and coffee in Europe, China traded paper-making technology, and so on. But the most successful entrepreneurs were those dealing in the art of war (i.e. gunpowder, military technology, and materials needed in the military “industry”).
At this point, entrepreneurship implied a little more than just being good at something. It also implied being good at getting that something in front of your target audience. And so, the first salespeople and “logistics” businesses were born, making the economy a little more complex.
What happened from thereon is history. From farmers’ markets to entire citadels breathing to the rhythm of commerce and to the (in)famous shopping malls of today, only a few minor changes occurred, really. Business models split into four main categories:
- B2C (Business to Consumer, like retail stores such as Walmart)
- B2B (Business to Business, like consultancy services such as PWC)
- C2C (Consumer to Consumer, like marketplaces such as eBay)
- C2B (Consumer to Business, like freelance websites such as UpWork)
Of all these, the last one is more recent (in the sense that faster and more widespread internet connection enabled it). The others are, in essence, pretty old (almost as old as entrepreneurship itself).
For a long time, these models were the de facto. People bought things they used (or pushed to the back of their garage), and then they bought new things in a seemingly endless cycle. Sometimes, they rented stuff – like apartments before they started a family, cars on vacations, and movies on Fridays.
That, until the great disruptor came along…
Ladies and Gents, Enter the Sharing Economy
Sometime toward the end of the 20th century, a very smart guy called Pierre Omidyar created something that was bound to break open the floodgates of the Sharing Economy. They called it eBay and to date, it is one of the largest and most influential online marketplaces in the world.
Others followed soon, and thus, a brand new concept was born:
The Sharing Economy is broadly defined as a peer-to-peer business model where everyone owns objects and services together. For instance, nobody actually owns all the movies on Netflix: we all pitch in and pay for them together. Likewise, nobody actually owns hotels on Airbnb, people with houses and apartments rent them to other people for short amounts of time.
The same model applies (or can be applied) to pretty much every type of business out there – if not in any other way, then through the filter of the subscription box industry (a slice of the Access Economy cake valued at no less than $10 billion in 2020!).
In many ways, the Sharing Economy is bringing us to the basics of barter: I have something, we can share, but you will have to pitch in as well. And it’s a win-win for both of us, because you don’t pay the full price for something you’re not using recurrently and I don’t pay the full price either.
Why Now? Why The Buzz around the Sharing Economy?
If we had to give you a simple answer, it would be this:
The stars aligned.
But our answer has nothing to do with astrology and everything to do with the verticals supporting the rise and growth of the Sharing Economy and, as we will keep discussing in other posts, the Access Economy. More specifically:
The internet gave everyone access to information, products, better education, socialization, and new channels of running business operations in a multitude of industries (almost all, actually).
The internet connected people and information. It offered people a massive marketplace to buy and sell their products and services. It created the bridge of communication we all needed. And all at the speed of broadband connections (OK, it was dial-up at first, but we all want to forget those days and the incessant beeping sound, right?).
The Internet…of Things
The Internet of Things (IoT) is a term used when speaking about networks created by physical objects: smartphones, wearables, home electronics, and so on. IoT technology connects to the internet and feeds data to and from the specific “things”, allowing for better data collection (and, frankly, for an easier, healthier, and more stress-free life).
How is IoT helping the Sharing Economy? Well, it connects us even more – and maybe more importantly, it makes the Access Economy safer and more profitable. For instance, if you want to start a bike sharing business, you can install devices on them to make sure you always know where they are, how used they are, when they will need a replacement, and so on.
We have created so much information they needed a name for it – and so, the term “Big Data” was born. Defined as large amounts of both structured and unstructured data, this “big thing” lies at the foundation of the first Sharing Economy mammoths (including Airbnb and Uber). The more information a business has about its users, the better it can tailor its subscription-based products to their taste and… pocket.
Gen Y & Gen Z
Undoubtedly, the fact that both Millennials and Generation Z have a different set of values plays a very important role in the rise of the Access Economy. Moreover, these generations have been raised in a socially, politically, and economically different space than their predecessors – so in many respects, the Sharing Economy is the only one making sense to them, both from a financial and from an emotional perspective.
Last, but not least, the Sharing Economy is gaining ground because the path is already (somewhat) paved. You have Netflix and eBay and Uber and Airbnb to show you the way (at least to some extent). You have the set examples in place, but the market is not yet saturated – which makes this the perfect time to step up and embrace the new paradigm.
Exciting times ahead, people! And we’re just turning the first page of this book!