Why Pre-K Matters: The Sharing Economy

The sharing economy is slowly becoming one of the most significant economic trends of the 21st century. The model, whose growth largely took off during the financial crisis, is based on an instruction Pre-Kinder teachers told us every five minutes; share. Only —of course — what we mean by this is the sharing assets and materials and of interacting with other people, not just our stuffed animals. There are multiple businesses in the share economy that you may recognize: car-sharing services like Car2go and Zipcar, accommodation providers like Couchsurf and Airbnb and co-working location finders like Office Nomads and HUB.

Those blue smart cars that you see as you make your way to campus aren’t just the cool cars that can park anywhere. They are reflective of a larger and more significant economic shift: the movement from ownership of goods to access. Instead of buying a camera, a trumpet or any other high-end household item, you can download SnapGoods (or one of its three competitors) and borrow it from someone in your area.

The worth of businesses in the share economy is significant considering its wide appeal to individuals all over the world who seek convenience and, in most occasions, a more appealing price: Zipcar, who made $4.7 mn dollars in profit in 2012, was bought by Avis Budget Group for $500 million in 2013. A PriceWaterCooper research study done this August showed that the share economy’s global worth of £9 billion is likely to be held by the five key sharing economy sectors only in the UK by 2025. Forbes also estimated that the revenue that flows through the share economy economy directly to individuals will be more than $3.5 billion this year. With an expected growth of around 25%, businesses within the sharing economy are slowly becoming a major economic force to the global economy, are of the very few powerful industries that are based on human-to-human interaction and its success is very reliant on technology and social media.

Information Technology

Technology is often labeled as the enabler of this new economy, considering its ability to connect people and to facilitate the flow of information. This flow is what enables clients to know they are receiving trustworthy services and vice versa. It is also the platform by which these businesses operate (normally through websites or applications), considering its ability to get people in touch and to perform a transaction with ease regardless of location.

The vast majority of online sharing platforms have screening systems similar to that of E-bay that exist to assure both the provider and customer that a legitimate transaction is going to happen. You can look up your prospective tenant on Facebook and make sure they aren’t the kind of person that will destroy your house before you give up your keys.

Travelers’ Delight

One group of people to which the share economy is particularly attractive is to travelers. The numerous housing options that are offered on Airbnb or Couchsurfing provide the opportunity to attain a truly authentic experience wherever you go. Renters can experience a city from the perspective of a local resident, as oppose to having the same experience everywhere if you chose to stay at the closest Marriott. We can’t expect every Airbnb option to offer the amenities and luxuries of a six star hotel, but sufficient research/provided information or willingness to pay more can definitely help us do the trick.

Competition with hotels (and with taxis in the case of car sharing) has stirred up governments and employers within these industries because of the absence of fees and taxes for similarly provided services. However, although competition indubitably exists, its widely accepted that there will always be a market for hotels. These people are most likely the risk averse who have a concern for safety and/or comfort or too small/large groups that could find it inconvenient.

Its interesting that the annoying instruction that we received as toddlers used to tell us has now become the principle of a global economic trend. The sharing of resources, be it a lego, an apartment, set of pliers, a car enables individuals to interact with others and be more efficient in their overall consumption of goods. The fact that it has stirred up some regulators and woken up companies like Avis Budget reflects its true potential and future value. Keep sharing.