One of the sharing economy’s global innovators came to Canada on Tuesday to proclaim that the trend is not only here to stay, but killing the traditional business model as we know it.
Robin Chase is a co-founder and former CEO of U.S.-based Zipcar, the world’s largest car sharing service. During a keynote at the Ontario Centres of Excellence Discovery 2016 conference in Toronto, she declared that the traditional economic model will be surpassed by a new collaborative one.
“We’re all co-creators. The idea that I’m a passive consumer and I just wait for someone to create something for me? No … industrialized capitalism, for me, is dead,” said Chase.
The “sharing economy” refers to the socio-economic ecosystem developed around the pooling of human, physical and intellectual resources. Instead of choosing from a selection of products offered by traditional businesses, more consumers are using technology like the Internet, crowdsharing, open source software, 3D printing, blockchain and Bitcoin to create, customize, localize and share goods with wider groups of like-minded people, she said.
The Internet is the main “platform for participation” in the new sharing economy, she said, because it allows large numbers of people to take advantage of excess capacity of existing resources. She defined excess capacity as “something that already exists and has already been paid for” that can be leveraged for new opportunities among widespread user groups.
To give an example of excess capacity, Chase cited open data initiatives allowing citizens and businesses to use existing government data for their own new purposes. Another example of excess capacity is the smartphone, she suggested, because it was developed by companies like Apple but is used for millions of new, customized purposes via APIs.
Mesh networks
Chase is now focused on another sharing economy startup that also involves vehicles. About two years ago she co-founded Veniam, a firm based in Portugal that says it is pioneering “the Internet of Moving Things.” The company creates free public “mesh networks” by tapping into existing Wi-Fi and 4G service on buses, taxis and corporate fleets.
Although public users don’t pay for the service, Veniam’s business model envisions each local mesh network sponsored by a large telecom provider. It’s also possible that user data collected from public mesh networks could be given or sold to governments and corporations.
This collaborative type of approach “is incredibly resource efficient and so incredibly cost efficient” because it taps into existing infrastructure to create new and recurring value for more users, Chase said: “You get economies of scale and enormous opportunities for growth.”
Questions remain
While sharing economy startups like Zipcar, Uber and Airbnb have indeed seen tremendous growth, questions remain as the sector continues to evolve and mature. Uber and Airbnb have been accused of flouting licencing and taxation rules that govern the taxi and hotel industries in jurisdictions worldwide. In July, the City of Toronto will impose new regulations on Uber’s UberX service involving insurance, vehicle inspections and fees for licencing and applications.
Zipcar’s 2013 acquisition by Avis also raised the question of whether the sharing economy will simply become a subset of the traditional business model instead of usurping it.
Late last year, Instacart’s decision to lay off 12 recruiters and boost its delivery and annual subscription fees by 50 per cent had some observers wondering if sharing economy ventures are sustainable outside of the largest urban cities.
When customers of U.S.-based Instacart order groceries by mobile app, the company sends an independent contractor to shop for them at major stores like Whole Foods, Target and Costco. Each driver delivers the groceries to the customer’s door in as little as one hour. Instacart is considered a sharing economy firm because drivers use their own vehicles to shop for the groceries and deliver them to clients.