Here’s a mind blowing economic trend that the majority of us over the age of 35 probably aren’t paying much attention to.
It’s a transition being driven by the millennial generation –those born roughly between 1983 and 2007 — and it’s taking place on the outskirts of what we consider the modern corporate economy.
Many of us who aren’t millennials might be inclined to think the trend is flaky. And that would be a big mistake, because the companies driving the transition as well as their young devotees believe it provides a golden opportunity to revolutionize the values of entrepreneurship, resilience, community and economic self-reliance.
The trend is known as the sharing economy, and it values the idea of access over ownership. Among its central tenets is a revolutionary idea… value un-utilized is economically and socially wasteful.
Here’s a quick quiz for us wrinklies that will probably underscore just how out-of-touch we are with this trend:
Ever heard of any of these companies? (no cheating by clicking on the links)
If you’re drawing blanks, don’t feel bad, the corporate world probably isn’t paying much attention to them either… But they should.
And so should you.
Because each of these companies and dozens, maybe hundreds of others tucked away in nooks and crannies all over the globe, could be an existential threat to an old economy based on an ownership model.
Take cars for instance…
Several years ago when I still lived in a big city I owned a top-of-the-line Acura TL. It set me back almost $40,000 (financed to the hilt of course).
A top-notch insurance policy cost me another $1200 annually. Parking tickets probably another $500. On an annual basis, I was paying over $12,000 to commute back and forth to an office… 5 miles away.
Recently, I traveled back to the U.S. for business and was talking to the millennial son of a friend of mine. He doesn’t own a car and has no plans to buy one.
Instead, he uses ZipCar and CarToGo — car-sharing services where users rent vehicles by the hour.
He pays $4 per hour and .25 per mile as well as a $10 per month administrative fee. With ZipCar, he parks the car in a designated parking space a block from his apartment when he’s finished using it. With CarToGo, he parks the car wherever he likes.
He has a wide selection of vehicles – Toyota Prius’, SUV’s, even full electric cars — and finds the make, brand and location of the car using an iPhone app which he uses to book his reservation 30 minutes before he needs it.
He estimates that his annual travel costs are about $1200, one-tenth of the cost I paid back in the day for the pleasure of “owning” my bad-ass Acura.
And it’s not just cars…
The access economy is revolutionizing how we think about the entire idea of ownership and paying for services.
Airbnb.com is an alternative to hotels, which allows homeowners to generate extra income by renting out an unused bedroom in their home to travelers.
Yerdle.com is an online service where users list items they just want to give away (clothing, electronics, home & office equipment, sports equipment, movies, books) or exchange for something else they need.
Educational services like TradeSchool.coop provide a network of barter-for-education schools and instructors, in which instructors will teach you a trade skill in exchange for some service they need… all without any exchange of money.
Services like TaskRabbit even allow you to outsource your chores. You set the price for someone to do your grocery shopping, house cleaning, or yard work, and “TaskRabbits”, college students, young professionals, recent retirees, earn extra income by accepting your offer.
Yes, for those of us who aren’t millennials, it may be tempting to roll your eyes at these hipster companies with bubble gum names, but they are here to stay.
And they are part of a trend towards massive economic decentralization that is rapidly changing the way we work, play, live, commute, buy, sell and trade.
How massive? Think about it this way:
How does a central government tax and regulate barter transactions in exchange for an education in a trade skill?
What happens to mega-banks when consumers no longer need car loans or school loans because they no longer need a car or even a loan to pay for an education?
What happens to the revenues of Marriott or Sheraton when a substantial percentage of their customer base chooses to book a more affordable room through AirBnb.com or CouchSurfing.com instead.
What happens to WalMart revenues when potential customers’ first instinct is to log on to Yerdle.com to see if the site has what they need before making their pilgrimage to a Super Center?
What the early adopters of these services are learning is that sharing, bartering, renting, and trading are far less costly and often more rewarding than owning.
This is a trend that’s in it’s nascent stages to be sure… But it’s happening extraordinarily fast thanks to the Internet’s ability to disintermediate the centralized gatekeepers we’ve come to depend on for our well-being.
It’s also happening because of a very human desire to reconnect with community and move away from the isolating and impersonal aspects of massive centralization.
It’s easy to see doom and gloom around every corner in the world today, but that’s only because we’re in the midst of a cataclysmic changeover to a new economic paradigm that will tap economic and social value out of hundreds of heretofore idle and underutilized resources.
The sharing economy is but one of many manifestations of this changeover. It’s a trend that I predict won’t be a flash-in-the-pan, but one that will fundamentally alter the way we think about business, ownership, entrepreneurship, self-reliance and community.