In the future, we may own much less and share much more. And if we do, it will all be down to big data.
In the last century, owning things was the marker of the middle class. Those who had more money could own more things. But as manufacturing became less expensive, the barrier to owning a great deal of stuff was lowered. Today, many people living at or below the poverty level own plenty of things, but it isn’t a good indicator of their relative wealth.
In fact, as millennials enter adulthood and the middle class, the trend seems to be for them to own less stuff. Not only is there a thriving “minimalist” movement, but the advent of the digital and sharing economies have made this much easier.
Where Baby Boomers and Gen Xers might have had shelves and shelves dedicated to books, magazines and music in their homes, today we can fit the same amount of media and more onto the pocket-sized computers we anachronistically still call phones.
Whereas being a “two-car family” [or even three or four cars] was once a mark of status, today many millennials see more status in being a one-car or even zero-car family and making use of services like Uber, Lyft, CarGo, and others to use cars only when they need one.
Ridesharing, apartment/home lending, peer-to-peer lending, reselling, coworking, talent-sharing… The sharing economy, sometimes also called the collaboration economy, is taking off in all sorts of niches.
Beyond a disillusionment with consumerism, what’s driving this trend is data. Most — if not all — of these upstarts would not be viable businesses, certainly not on a large scale, without leveraging a platform and a foundation of big data.
These companies don’t just represent a new way of thinking or new services, but a new way to use data effectively to provide services to people when and where they want them.
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The obvious examples here are Uber and Airbnb, both of which developed their own platforms to allow service providers and users to connect to the benefit of both. But there are other interesting examples of companies using data and developing platforms to join this new economy:
- Freelancing — Sites like TaskRabbit, Care.com and Upwork have taken the freelance market to a new level. Upwork specializes in helping more traditional freelancers [writers, graphic designers, coders, etc.] connect with business owners looking to hire; while TaskRabbit does the same for services like handymen, dog walkers, personal assistants, and so on. Care.com specializes in caregivers for both children and the elderly. The platforms each of these sites have built make it possible to connect those offering services with those seeking the services.
- Coworking — WeWork is only one of many companies providing coworking spaces in big cities around the world. Freelancers, entrepreneurs, and telecommuters can rent a desk or an office without the overhead and cost of renting an entire building or suite. Prices are low enough that you can use it as you like, and the space offers some of the benefits of an office including meeting space, phone lines, internet, and often free coffee and even free beer and wine sometimes.
- Car sharing — Services like Lyft and Uber allowed individual drivers to operate like a taxi service by providing them a safe way to find clients and get paid. Zipcar allowed people to borrow cars for very short periods of time, like the length of a big shopping trip. And now, services like Getaround enable individuals to share their cars with neighbors and get paid for it by connecting the users on the Getaround platform, automating payments, and even insuring the cars for up to $1 million. Liquid provides the same service for renting bicycles!
- Peer-to-Peer lending — Lending Club and sites like it allow people to lend one another money, with much lower interest rates and fees than traditional credit cards or bank loans. Investors earn solid returns and borrowers get more competitive rates, all facilitated by the platform.
- Fashion — Sites like Poshmark and threadUP allow individuals to sell their gently used clothing while services like Le Tote offer subscribers the ability to borrow clothes and return them like a Netflix subscription for your closet. Rent the Runway allows women to rent designer gowns for a special event at a fraction of the price of buying one.
- Sharing resources — Neighborgoods and similar sites allow people to borrow resources — like tools and kitchen appliances — directly from their neighbors. Rather than buying a specialized tool for a single project, people can connect with and borrow from their neighbors, facilitated by the platform.
None of these services would be possible without the big data and algorithms that drives their individual platforms. Without a sophisticated app to match a driver with a rider, Uber wouldn’t be competitive with taxi drivers who cruise around all day looking for fares — and the same is true of each of these services.
What’s fascinating is that the company is rarely the actual service provider; instead, they act as facilitator, making the transaction possible, easy, and safe for both the provider and the user. They break down the barriers that otherwise exist to starting a business or a “side hustle” for many people and make it both easy and lucrative to participate in this collaborative economy.