Reflections on the Sharing Economy

I learned a lot from our week in San Francisco, but my top three take-aways are:

 “Everything is up for debate.” – Mike Truong, Uber. Sharing economy companies systemically experiment and use data to drive their decision-making.  This isn’t a huge revelation, but I was impressed with the degree to which Uber, Airbnb and Feastly were all gathering data in order to improve their processes, product and customer service. Though of vastly different sizes and stages of growth, each company has impressively incorporated experimentation that is driven by data – not hierarchy – into their culture and systems. Born of this will be predictive pricing, tougher security measures, and tailored services that each company hopes will deliver a better product to both the peer provider and the peer user. Importantly, experimentation also means accepting and learning from failure, something that can be hard to handle when the stakes seem so high. Despite the risks, systematic data-driven invention and experimentation ensure that, as these companies grow, they will remain nimble enough to change strategies, spot trends, and continue to solve problems that their customers didn’t even know existed.  

 “Our currency is trust.” – Chip Conley, Airbnb. Sharing economy companies must constantly work to help the peers trust each other, and therefore, trust their platforms. For the sharing economy companies, legitimacy is everything. Feastly rigorously vets chefs and takes professional photos of their meals in order to help diners trust that the experience will be professional and the food will meet safety standards. Uber improves their app to strengthen security and feedback measures to build trust between drivers and passengers. Airbnb works with municipalities and grassroots groups to ensure that community cultures remain strong in the wake of disruptive technologies. Only with these measures can these companies create the supply-and-demand loop necessary to survive and thrive, especially since for many the sharing economy is still quite new and consumers still need a lot of education about how to participate in it.

“I’m the sum of my experiences… our generation wants and values experiences.” – Noah Karesh, Feastly. Sharing economy companies must balance the desire to provide “experiences” with the need to meet customer expectations. There is a spectrum of sharing economy companies: either they offer “experiences” for a premium or they offer convenience at a lower price – it is difficult for a company to do both at the same time.

Feastly is basing its business on the assertion that diners will pay a higher price point for a special dining experience. A higher price point seems to work for some of their more professional chefs – diners expect to pay more for better food and service. But the company can’t completely move in that direction since doing so would limit the variety of their offerings and sacrifice the characteristic unique experience that can be had with amateur chefs who command a lower price point.

Uber’s challenge is that it wants to offer good experiences (e.g. drivers singing with riders), but what its riders really want – and have come to expect (e.g. riders upset with surge pricing) – are reliable, cheap and decidedly ordinary experiences.

Airbnb may have found the sweet spot. On one hand, it knows that many guests want a reliable, lower-price alternative to hotels that is without incident so that the accommodation enables the “experience” to happen in the neighborhood/community where it is located. Airbnb also wants to offer a certain amount of accommodations that are at a higher price point for the experience of staying in that accommodation (e.g. tree house). It has attained the balance between offering enough variety of the product to meet guest expectations about experience and price. Airbnb’s challenge is that it must now also ensure that customers are appropriately matched with products that meet their expectations and valuation for an experience.

San Francisco Reflection and Top Three Learnings

 

            I wasn’t quite sure what I was getting myself into when I signed up for this course but as I reflect on the past week on the plane ride back to DC, it is safe to say I am glad I signed up.  Not only did I get to experience the great city of San Francisco from a new and different perspective but I learned quite a bit about the sharing economy.  And most importantly, I discovered meal sharing and had some of the most delicious meals while meeting new people.

            My greatest takeaway from the course was the actual learning about the sharing economy and meal sharing.  The readings and pre-course work were very relevant, interesting, and laid a good foundation for my experiences in San Francisco.  I had always used Uber and knew how the company functioned but I had never experienced other industries and companies within the sharing economy.  When it comes to meal sharing, I had never even heard of the concept and was initially taken aback by the idea of going to a stranger’s home with other strangers.  All of my trepidations quickly dissipated after each unique and positive experience.  The three experiences we had in San Francisco were particularly amazing.  We got to explore different neighborhoods in San Francisco as a group and eat amazing food while meeting new people.

             I also learned a great deal from the company visits that were organized.  All three visits provided so much insight into AirBnB, Uber, and Feastly.  We were able to tour some of the most impressive offices I have ever seen but also got to meet with important people such as Chip Conley and Noah Karesh that are true influencers in the sharing economy at the moment.  They took a lot of time out of their busy schedules to answer our questions and talk very openly about their companies and the struggles and successes they are currently facing. 

My last takeaway from the course was the amount of work that was required to do a proper analysis.  From the user experience forms to the mystery shop forms to the importance-performance analysis, it was overwhelming at times.  We fit in three meal sharing experiences, a ride sharing experience, an attraction experience, moving all around the city every other night, company visits, data collection and analysis, and creating a presentation within a matter of four days.  I was so thankful to have such a great group and that we all worked so well together.

Top Three Takeaways from the Journey of Sharing Economy

Top Three Takeaways from the Journey of Sharing Economy

As I write this blog, I finally realize that this intensive journey is coming to an end. I’ve learned a lot meanwhile had so much fun. It opens up a new world and inspires me in my career thinking. The course integrated with self-study, group work, field work, office visit, etc. I find that this mode of study is effective than the normal classroom lecturing style. By interacting with MBA students, I also learned a lot about how they think and how they work and feel that there’s a long way for me. Besides, I have three major takeaways.

1.     The Power of Excess Capacity

Excess capacity, as the book Peers Inc states, is the latent value. Once making use of it, it would blossom and generate great ROI for both producers and users. The launch of Airbnb, Uber, Zipcar and other sharing platforms are genious. Taking Airbnb as an example - by making more efficient use of the excess capacity of rooms, Airbnb uncovered new way of gaining extra value which is useful to consumers at the same time. The sharp marketing insight is crucial to discover the under-utilized inventory; the proper marketing operation is essential to utilize the excess capacity into value.

2.     Customer Experience

Customer experience is highly valued in all peer-to-peer platforms. From company research and course material reading, I found that companies do try their best to enhance user experience. Airbnb has built a hospitality department and created nine hosting standards for hosts to follow in order to improve guest satisfaction. Uber has a special reward program to its drivers – taking care of its drivers, and let drivers to take care of customers. However, customer experience is complicated. By experiencing from the user side, I spotted many flaws in those platforms. The biggest one is the company customer service which needs to be improved.

3.     Strategic Vision

The office visits to Airbnb, Uber and Feastly and meeting with companies’ executives are thought provoking. Staying with strangers can be unsafe and risk. By bringing out a public reciprocal review system between host and guest, Airbnb turns its worst disadvantage to best opportunities. Uber uncovers other opportunities by dealing with helping a son to call a uber for his mother. The strategic vision is what I need to learn from those companies.

MY SAN FRAN REFLECTION

One word:  wow.  The amount of work done, meetings attended, and experiences had in a few days was impressive.  I didn’t think I had it in me after getting well under eight hours of sleep per night, but somehow our group pulled through.  The work was daunting, but at the very least it was interesting. 

  

Looking back, it wasn't so much work but a life learning experience.  I was able to learn many different things about the sharing economy.   Our group was able to attend three different meal-sharing experiences, take a cookie-baking class for the attractions piece, try-out Getaround as well as stay in a HomeAway property.  We visiting the AirBNB, Uber, and Feastly offices and were presented to by some very impressive employees.  One piece I took away is that the companies we all studied still have a long way to go.  All of the groups were able to recommend very specific and concrete improvement opportunities and a lot focused on Customer Service.  Another thing I learned was that these companies are very inconsistent.  Just because I had a good experience somewhere or with a specific company, it doesn’t mean someone else will have the same experience.  I also learned that you don’t have to be 50 years old to start a company; you have to be passionate regardless your age.  The fact that I knew almost nothing about the sharing economy only a few short months ago, now seems unreal.

Overall, the trip to San Francisco was definitely a lot of work, but in exchange, I received a lot of knowledge on an extremely interesting and growing industry.