Collaborative Consumption – What Is This, Where Is It Going?
This post is by guest blogger, Nick Allen of Spring Ventures, a multi-stage/multi-strategy venture fund that invests in novel information technology and cleantech companies. He has a great deal of experience in clean tech and on Wall Street. He is passionate about the potential for capital in in private and public markets to revolutionize broad sectors of the economy like transportation, energy and the built environment. He is our guest host on this week’s Twitter chat, #kaizenblog. Please join us to explore Collaborative Consumption this Friday at 12pm ET/5pm GMT/9am PT on the Twitter chat, #kaizenblog.
Join us as I guest host on the Twitter chat, #Kaizenblog Friday at 9am PT where we will discuss the very cleanweb concept of collaborative consumption – the massive rise in sharing/trading/renting of goods and services enabled by information technology and peer-to-peer market places. While an unfamiliar term to many, collaborative consumption is part of a widespread cultural shift in how we interact with others, our stuff and our surroundings.
More and more our idea of an ownership society is giving way to one where we value experiences and access over ownership. No longer do we need to own the vacation home, the car, the CD, or the DVD. We want the experience they provide without the hassle, cost and inefficiencies of ownership. Yesterday’s vertical business practices and centralized distribution systems no longer serve the needs of a culture that is highly open and highly networked. Collaborative consumption flies in the face of traditional consumer culture and replaces it with the efficient and social use of products, services and resources. The result is a sustainable, improved and lower cost experience.
A few questions to ponder ahead of Friday’s tweet chat…
What are some examples of collaborative consumption?
Buildings: There are 260, 80 and 2.4 billion square feet of residential, commercial and storage space respectively in the US. That’s over 1,100 square feet for every man, woman and child in the US. Using this incredible asset base more effectively and efficiently is a key theme of collaborative consumption. Companies like Airbnb and Homeaway are displacing the need for costly and energy intensive hotels by facilitating home share and rental between individuals.
Transportation: Cars sit idle 95% of the time. The average person spends 35 hours of year in traffic at a cost of $115 billion per year in wasted time and fuel. Peer-to-peer car sharing networks like Zip Car give the benefits of ownership without the hassle.
Goods: The average power drill is used for a combine total of 20 minutes. Craigslist and EBay were the first to connect buyers and sellers and give life to products otherwise destined for landfill. The greenest of products are the ones that never need to be manufactured in the first place. This idea has been extended more broadly through companies like Rentcycle, FreeCycle and ThredUp.
Finance: Banks and credit card companies have long controlled the purse strings. Social and peer-to-peer networks are opening up lower cost ways for consumers to get loans and investors to put capital to work by cutting out the costly middleman. Solar Mosaic allows anyone to invest in solar, Angel List is connecting startups with much needed early stage capital, and Lending Club and Prosper are getting consumers better terms then they ever could from their credit card companies.
How big can this concept be?
As I mentioned above, collaborative consumption spreads across every industry. It’s not just a business practice but also a secular cultural shift that is impacting broad segments of society. And it’s not just happening in the US, but abroad as well. I’m not kidding when I say this is a mutli-trillion dollar movement.
A NY Times article from early October talked about how barter networks were surging in Greece as economic crisis gripped the nation. This is collaborative consumption replacing a major currency!
What are the cornerstones of the movement?
Trust: Companies and brands have spent enormous amounts of time and money building trust with their customers. We want to know that the products we use will perform as expected and will be safe. The level of trust for collaborative consumption to work is even higher. It’s more personal in nature and challenges our ideas around privacy and ownership. My hope is that we see new services arise that increase trust between parties and further accelerate peer-to-peer.
Critical Mass: Convenience drives the modern world. Zipcar works because it’s local and there when I need it. The swapping of goods is very local as well and needs a balance of supply and demand.
What happens next?
Mobile is going to make collaborative consumption more and more on demand. The ability to use things when we want and how we want is only going to increase. Trust networks built by social media and our online presence is going to further meld with our physical lives allowing greater use, flexibility and efficiency.
Where can I find more information?