GW Sharing Economy Course: Reflections on the Sharing Economy

This past week I visited San Francisco to study the sharing economy. Aside from having a great time and being able to explore the city like a local through Vayable, Viable, and Viator, I came away with a few major insights:

The Power of Excess Capacity

One theme that is central to the sharing economy is the utilization of excess capacity. Uber and AirBnB have built billion dollar businesses by capitalizing on excess capacity and repurposing existing assets. AirBnB has become the largest lodging company in the world and does not own a single property. Uber is now the largest ride service company in the world and does not own a single vehicle. These companies took advantage of assets that were not being fully utilized. Before coming to San Francisco, we read about the concept of excess capacity in Peers, Inc. Two of the the more-clever examples of excess capacity include Duolingo and ReCAPTCHA. Duolingo is able to offer free language translation software to users by repurposing its software to translate foreign websites as it teaches. ReCAPTCHA originally existed only to distinguish humans from bots in cyberspace but recently put its excess capacity to good use in the form of digitalizing books and newspapers. The sharing economy has been built upon excess capacity and these companies are able to take advantage of existing assets and focus their business model on building platforms that connect users. It is exciting to see what ingenious use of excess capacity will emerge next.

The Tours and Attractions Market is Plagued by Inconsistency

An interesting aspect of this course was its focus on four different peer to peer markets: lodging, transportation, dining, and tours and attractions. It was intriguing to compare and contrast the business models of all four segments. The transportation and lodging segments are more mature and this is felt from a user experience standpoint. Booking a house on AirBnB or a ride on Uber is quick and easy. Booking a tour on Vayable or VerLocal is much more complicated. Options are limited and when you do find the right tour, you could wait up to a week to receive confirmation. There is no instant booking capability and oftentimes the description of the tour itself is missing pertinent information. And lastly, there is limited quality control from these tour companies to ensure hosts are offering positive experiences. Luckily, the three tours we booked met expectations, but there are many stores on social media about tours that fell short of what was promised during booking. Sites like Vayable and VerLocal face a real challenge. Both companies are trying to grow and add as many tour offerings as possible. However, as they continue to increase the number of tours, they will need to keep an eye on quality and consistency of these offerings.

This is Just the Beginning

The sharing economy is just getting started. Every week it seems there is a new start-up competing for an aspect of the peer-to-peer market. Companies in the dining and tours and attractions segments are fighting to gain traction with consumers. Companies like Uber and AirBnB are focused on quality and reliability while continuing to add more properties and drivers. One theme that emerged while meeting with Uber and AirBnB this week is both company’s desires to expand into other areas of the travel industry. AirBnB, for example, is hoping to provide complete itineraries for its guests including where to eat and what fun things to do while staying in its properties. It might even go as far as to allow hosts to provide ancillary services like meals and tours. This is just the beginning of the sharing economy. There is a large amount of untapped potential in this industry that is soon to be unlocked. Whether it is brand new peer to peer services or more inclusive, streamlined experiences from companies you already know and use, look out for new developments soon.

-Michael Spooner