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What’s Mine Is Yours Why sharing is an idea your business should borrow.
By Mike Darling
One of Jeff’s clients was acting funny. It was early 2012, and he was running a successful apartment cleaning business out of his spacious four-bedroom pad on New York City’s Upper West Side. Most people ordered a cleaning every few weeks, but not this guy. His appointments were frequent but erratic. Jeff called him to ask what was up, maybe commit him to a more predictable schedule. What he learned changed his life.
The client, it turned out, had been using a popular but still growing site called Airbnb to rent out his spare bedrooms—like hotel suites, only cheaper—and he wanted the rooms professionally cleaned after each guest left.
Since 2008, travelers have booked more than 10 million nights in 192 countries using Airbnb’s system, which now contains more than 300,000 listings. A recent report concluded the site pumped $52 million into San Francisco’s economy over the past year alone. And that success hasn’t gone unnoticed: According to The Wall Street Journal, venture capitalist Peter Thiel—an early investor in Facebook—has considered buying a $150 million stake in the company, a move that would value it at a staggering $2.5 billion.
Inspired by his client, Jeff decided to rent out his own spare rooms. “I’d had a bad run of roommates,” he says. “You can imagine how desperate I was to get the household finances in order.”
Within months of creating the listing, cash flow was no longer a concern. Both bedrooms were regularly occupied, and their nightly fees—anywhere from $75 to $250 per room, depending on the time of year—covered much of his rent.
Stories like Jeff’s aren’t uncommon. He’s now a small part of the burgeoning “sharing economy,” in which millions of people have used a wave of new online services to share goods, services, and even knowledge, all in the name of making a buck. “Everyone has a way to earn money from things they already own, which is an empowering and limitless concept,” says Nate Blecharczyk, Airbnb’s co-founder. “If you can rent out a room in your home, why not rent out the tools in your shed, or your car while you’re at work?”
The seeds of this idea have existed for some time now: Websites such as Craigslist, for example, have allowed people to sublet apartments and even offer couch space to budget-conscious travelers for years. But there’s a key difference between sites like Airbnb and their predecessors.
“What’s allowed Airbnb to work so well is that its founders included a large social networking component that helped them to build trust.” says Michael Luca, assistant professor of business administration at Harvard Business School, who has studied the sharing economy.
Airbnb came with built-in mechanisms designed to help high-quality owners rise to the top. Renters were encouraged to give feedback, rate experiences, and speak to the occupants before committing to a space. In this way, Airbnb harnessed the power of social media to make people feel more comfortable about the risk they were about to take. The owners, meanwhile, seemed to embrace the thrills that came with their nascent entrepreneurialism.
“People are looking for a more inclusive way to be involved in the exchange of goods and services,” says Airbnb’s Blecharczyk.
Indeed, many entrepreneurs have started following Airbnb’s example. RelayRides, now available in many major cities, allows people to rent out their cars for as little as $7 an hour, appealing to those who might just want to run a quick errand rather than pay for an entire day’s rental.
And if you’ve decided to forgo car ownership, you can still take advantage of your driveway’s unused real estate on Parking Panda, a new service geared toward motorists in urban areas where privately owned lots and garages charge a premium. But while the primary appeal of these businesses may lie in the savings, it’s not the only reason for their sudden boom.
“Beyond economics, the movement is also driven by a sense of community and shared experience,” says Nick Miller, Parking Panda’s co-founder and CEO. “You can get a lot more out of your trip by staying with a local in a neighborhood where there might not be many hotels or by using a service like Lyft to get a ride with someone who can recommend the best ramen in the city.”
Gidsy, a new travel site, takes that idea even further, linking visitors up with locals who are eager to act as impromptu tour guides, meaning you don’t always need access to tangible goods to participate in the sharing economy.
The draw of these sites lies, partially, in their ability to allow customers to circumvent traditional businesses like tour agencies. “Today, people can leverage these platforms and conduct commerce externally,” says Chris Redlitz, a founding partner at Transmedia Capital, an investment group that focuses on early-stage companies.
Other sites—Zozi, Vayable, SideTour, GuideHop, and Blink Collective—in one way or another, allow people to visit new cities and book unique experiences, or meet up with locals who want to show off their town’s greatest, most underappreciated assets. That, some investors say, is a quality likely to be embraced as younger generations of travelers come of age, and it’s part of what’s helped these businesses take root.
“Millennials are more accepting of business models that are about helping each other,” says Dave Knox, co-founder of The Brandery, a Cincinnati-based startup accelerator. “Because of technology, sharing is taking place on a scale never before possible.”
While these burgeoning businesses may be writing new rules of commerce, they sometimes struggle to comply with long-standing laws. In New York, for example, Airbnb users like Jeff who rent out private residences without a license could be subjected to hefty taxes and fines.
But those hurdles are small compared to the momentum the sharing economy is experiencing. And lucky for entrepreneurs like Jeff, the spirit of generosity tends to be infectious. “I have standing invitations to visit everywhere from Australia to Brazil to virtually any place in Europe,” he says.
Now that’s a thought worth sharing.
Mike Darling is a senior editor at MensHealth.com.
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