Chapter 15: The Sharing Economy, Collaborative Consumption, and Efficient Markets through Tech Flashcards
1
Q
Introduction
A
2
Q
Tech allows diverse (groups of) product and service providers to connect with consumers
A
Which offers far greater reach and efficiency than traditional markets.
3
Q
Efforts are enabling a generation of “citizen suppliers”
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Where product owners become PROVIDERS of rentals
- Rooms (Airbnb)
- Cars (Turo) turbo
- Boats (Boatsetters)
4
Q
Citizen suppliers cont.
A
New class of micro-entrepreneurs providing personal services
- car rides (Uber, Lyft)
- pet sitting (Rover)
- meal prep (Feastly)
- Home services (Care.com, Angie’s List, Handy)
5
Q
Some. Firms are buying inventory and renting it out
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- Rent the Runway with dresses
- Zipcar with autos
- Chegg with textbooks
6
Q
Collaboratively Consumed:
A
Where an individual takes possession of an item for a period of time and then returns it for use by others.
- something an individual owns outright to something that is collaboratively consumed
7
Q
Collaboratively consumed cont.
A
- Consumers collaborate as financiers, pooling capital to back projects (Kickstarter, GoFundMe) and provide loans (Lending Club, Kiva)
- Internet-enabled market makers
- Trace roots back to eBay and Craigslist which empowered all sorts of individual sellers and service providers
8
Q
Some Examples of Firms Often Characterized as Part of the “Sharing Economy” or “Collaborative Consumption”
A
9
Q
Sharing Economy Firms: GOODS
A
- Pre-owned: eBay, Craigslist (peer to peer supplied); ThredUp (firm-owned inventory)
- Loaner products: Zilok (peer to peer supplied power tools); Rent the Runway and Chegg (Firm-owned inventory)
- Custom products: Etsy
10
Q
Sharing Economy Firms: SERVICES
A
- Professional services: Upwork, crowdSPRING
- Personal services: Angie’s List, Handy, TaskRabbit
- Delivery: DoorDash, Grubhub, Instagram, Postmates (Self-employed drivers for restaurant or grocery delivery); Drizly (drivers and alcohol inventory owned by suppliers)
11
Q
SSF: Transportation
A
Services: Uber, Lyft, Didi (cars supplied by drivers themselves)
- Loaner vehicles: Turo (peer to peer supplied), Zipcar (firm-owned inventory)
12
Q
SSF: Places to Stay
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- Office Space: LiquidSpace, ShareDek (peer to peer supplied inventory)
- places to stay: Airbnb, HomeAway, Coushsurfing (peer to peer supplied inventory)
13
Q
SSF: Money and Finance
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Money lending: LendingClub, Kiva, Prosper (peer to peer loans)
- Crodfunding: Kickstarter, GoFundMe, Indiegogo (peer to peer capital)
14
Q
Ex of sharing economy categories
A
Goods, services, transportation, places to stay, money and finance
15
Q
Citizen suppliers are…
A
Offering services and renting out their own goods
16
Q
Other firms are…
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Taking possession of inventory to organize resale or rental markets.
17
Q
11.1 Key
A
- the sharing economy is allowing firms to pool resources, products, and services in ways that create new markets and market opportunities
- citizen suppliers are offering services and renting out their own goods, while other firms are taking possession of inventory to organize resale or rental markets
- definition of the sharing economy are imprecise but a common set of dynamic underpin market competition and growth
18
Q
Share on! Factors Fueling the Rise of Collaborative Consumption
A
19
Q
Many sharing economy firms were born during a prolonged, worldwide economic recession
A
- stagnant wages have boosted consumer interest in low-cost alternatives
- encouraged a whole new class of lay people to offer services for hire
- many of the services also have an environmental benefit by fostering reuse and diminished consumption
+ apps and social tech help allay feats by collecting and sharing ratings of oth buyers and suppliers, ensuring payment and offering increased scheduling convenience
20
Q
Winning in Electronic Markets
A
- early players gain key assets such as NETWORK EFFECTS, SCALE, BRAND, and FINANCIAL RESOURCES to help expand and reinforce assets for competitive advantage
- gives firms a head start in the race to create a critical mass of buyers that will attract sellers and vie versa
21
Q
Winning 1
A
technology allows for peer-to-peer supply without need for inventory (whereas firms usually own inventory)
-> does it through the tech/app
— airbnb doesn’t own its hotel rooms
— Uber and Lyft don’t own cars
22
Q
Winning 2
A
Some services do oversee inventory to gain more control and offer higher quality and better customer experience
- Rent the Runway packs product for delivery, runs a massive in-house garment cleaning effort, and retires dresses that are noticeably worn
23
Q
Winning 3
A
In fragmented markets, marketplaces extend the value chain by connecting suppliers and customers with search and discover, scheduling, payment, reputation management, and more
suppliers gain reach and encourage discovery at a lower marketing spend, consumers see search costs lowered, and bot sides can benefit from services such as scheduling and payment, ↓ search costs for consumers
24
Q
*Social Media for Virtuality and Trust Strengthening
A
Word of mouth sharing and virtuality offered by social media accelerates the growth of the sharing economy
- 47% of participants in the SE learned about the services they used via word of mouth
Uber: every 7 riders attracts one new Uber user’ Uber coupons to attract friends as new riders
- 91% parti. Recommend the last service to a friend of colleague
- Drivers and customers link to Lyft through their Facebook accounts
- Social Proof
25
Social Proof:
Positive influence created when someone finds out that others are doing something
- trust conveying social proof endorsement; not just simply recruiting customers
26
Social Media 1
Some concerns include trust and safety issues
- Audit trails help with trust (Lyft: to call out any driver who tries to scam them or feel uncomfortable, while drivers are ensured a fare won't pull the no-cash dash)
- Rating can help with trust, safety, and service but can also reflect a crowd's bias and reinforce discrimination (gender, race, location, neighborhoods) [aka crowdsourcing bias]
27
*Can You Share Nice? Challenges of Safety and Regulation
- Instilling trust doesn't mean that firms are without safety issues and participants in the SE are continuing to evolve their policies as a result
28
Can you share nice? 1
Participating in the sharing economy raises questions for insurers.
- Will firms pay out if there is a SE incident with a supplier, or will they try to refuse?
- Some sharing economy firms offer service providers additional coverage and protection guarantees; offer their own supplemental insurance and safety coverage
- Some govts have explored additional insurance regulation for sharing economy participants
- insurers may be reluctant to cover individuals or assets if they are being used commercially
+Homes will experience more use, wear, and tear, likely a greater risk for the insurer, than if the insured item was only for personal use
29
Can you share nice? 2
Many local firms also benefit from taxes and regulatory fees from industries threatened by the sharing economy
- groups opposed to new, rival efforts can represent very powerful lobbies
30
can u share nice? 3
Concerns for firms in the SE is uncertainty around the ability of these firms to continue to consider their workers as independent contractors and not employees
- if improperly classified, employees may not receive important workplace protections
> such as minimum wage, overtime compensation, unemployment insurance, and workers' compensation
- the issue has gained the attention fo state and federal agencies and presidential candidates, and raises the specter of class action lawsuits
31
*WePay Winning Big: Processing Payments and Taming the Crowd through "Social" Security
WePay is a firm that has stepped up to offer simple payment solutions that specifically target the challenges of buyer/seller platform operators
32
Wepay 1 Combatting challenges in several ways:
- Veda fraud-fighting technology analyzes social profiles to get firms up and running with payments in a streamlined process
- has transaction history from hundreds of thousands of customers currently sending billions of dollars a year through the firm's systems
- ML technology continually update the firm's fraud models to adapt to new patterns it uncovers
33
WepPay 2
WePay makes adding payment capabilities to any site as easy as embedding a YouTube video, with a cut & paste of pre-generated code
- by linking to social media accounts, WePay can gain a fast read on whether founders and businesses are legit, very difficult to fake any history accrued over time
34
11.3 Larger firms have also stepped up with Investment, partnerships, and experiments of their own, underscoring a broad relief in the power and importance of the space.
building their own collaborative consumption efforts
35
*Future Outlook: Established Players Get Collaborative
- Alphabet and Toyota invested in Uber
- Alphabet and General Motors + Lyft
- Volkswagon + Gett taxi
- Apple + Didi
- Conde Nast + Rent the Runway
- Walgreens and TaskRabbit partnership
- IBM worked w Deliv; can make same day delivery services
- Avis acquired Zipcar
36
*Airbnb--Hey Stranger, WHy Don't You Stay at My Place?
1)Airbnb: Multibillion-dollar hospitality industry empire
- Over 200mil guests stayed so fat
- With listings in 81,000 cities and 192 countries
- no other single hotel group has this kind of reach
- 11:1 guest to listing ratio
Airbnb has rallied the sharing economy to produce the longest accommodations tail in the lodging industry
Listings include:
- Castles, yurts, caves, water towers, private islands, igloos, glass houses, tree houses, lighthouses, green homes
+Airbnb adds big value to both the supply and buy sides of a trx, and it's one of the few large players that can take a cut on each end of the deal
2) Trust is essential for the sharing economy to work
- No one is anonymous on Airbnb (guest identity is verified via a 2-step process)
- The firm offers a $1 million guarantee for hosts, secure payment guarantees, and 24/7 support phone service
+ Verification and trx auditing
+additional insurance coverage
3) Airbnb monitors trxs and communication at deep level:
- reservations, payment, host/guest communication, subsequent reviewers, technology hunts for scams and humans can be involved as needed.
37
*A Phenomenal Start, but Not Without Challenges
1) In many areas where Airbnb operates, providers of the service are breaking the law
- Running a biz in an area not zoned for it
- Health and safety laws governing hotels require things like sprinkler systems, exit signs, and clean towels
2) Competition threat, incl HomeAway
- Several hotel firms have experimented with homesharing (ie. Marriott, Accor Hotels, and Hyatt)
- Travel sites like Booking.com and Trip Advisor now incorporate competitors into their search
38
Uber's Wild Ride: Sharing Economy Success, Public Company Concerns, and Lessons from a Fallen Founder
1) Uber had raised $21 billion so far, and boasts a private valuation of over $70 billion
2) Uber claims to create over 50,000 new jobs a month, nearly all are drivers
- considered independent contractors and not Uber employees
- Uber drivers (when they do make the cut) do better than taxi drivers in both flexibility and pay
+ Make their own hours and are often engaged in a side hustle or filling gaps during unemployment
3) Uber services: a) trust and convenience; customers summon their ride with the tap of a smartphone app; riders can also set their pickup and drop off destination and get a fare quote for their trip; all payment is handled through the app; (+drivers and riders rate each other, keeping both sides of the 2-sided market satisfied)
4) Product-market fit
5) Runs a lean cost of doing biz:
- Eliminating human dispatchers eliminates the capital cost of a fleet (cars are owned by drivers, not Uber)
- Customer feedback reduces the cost associated with auditing driver quality and provides a continual evaluation of performance
- don't need to pay for cab rights in major cities world wide
6) Customers regularly complain of one downside--surge pricing
- Uber raises prices by a multiple where supply doesn't meet demand to encourage drivers to work; operates on a S and D scale (more drivers means lower prices)
+Dynamic pricing helps uber to offer a reliable service, make sure there are enough rides for those willing to pay for the service. w/out surge pricing, the real alternative is no service
39
Product-market fit:
a key concept in entrepreneurship and anew product development that conveys the
--degree to which a product satisfies market demand. Successful efforts should be desired by customers, and scale into a large, profitable biz
+ the magic happens when market need, weaknesses, and pain points are satisfied by a customer-embraced solution far superior to what is currently being offered
40
From Rebel to Revulsion: When Uber Behavior Became Hostile and Required Big Change
1) Problems began piling up:
- strikes by drivers, protests by the taxi industry, aggressive political push-back
- accusations of the theft of self-driving car tech
- dishonesty began to be seen as an Uber cultural trait
-rival lyft accused Uber of unethical behavior, incl calling and cancelling Lyft rides to crater the efficiency
- culture shown to be hostile to women and minorities
- had been hacked, exposing personal data of 57 mil riders and drivers
- cases of sexual assault
2) it's unclear just how damaging the fallout has been for Uber
- Network effects may make customers stick with the firm, even if they'd rather not remain
- talent and the fundraising wallet may be far stronger in pushing a firm to recognize and deal with repellent behavior
41
Tragedy but Tech raises the safety bar
Technology helps Uber keep a High bar
- uber app knows who the drivers are at all times, who was picked up, and where they were taken
- bad performance are exposed and customers (and drivers) empowered to shine a light on what might have been previously hidden
- collectively, this offers a safety bar conventional cabs simply don't offer
- Uber continues to invest in new technologies
> exploring voice recognition and biometrics to further strengthen diver verification
> implementing a panic button linked to emergency services
> a setting allows loved ones to monitor your ride
42
Uber: Driven by Data
- Employs mathematicians with PhDs in nuclear physics, astrophysics and computational biology
- The staff optimizes algorithms to determine number of drivers, where demand is, and dynamic pricing (when and how to alert drivers of projected demand and locations to best meet demand)
- "God-View" is a software system that shows maps, cars, locations of customers; representing every location where a customer is looking at the Uber app
- Uber's massive data haul allows it to cut prices and attract drivers to power continued growth and expansion
43
APIs to Expand Reach
Uber is embedding everywhere in digital world
- The firm offers an Application Programming Interface that is essentially a published guideline on how other developers can embed Uber into their own apps
- the service launched with 11 partners, incl OpenTable, United Airlines, TripAdvisor, and Hyatt Hotels
- A new initiative, Uber Health, offers APIs for integration into health care products; allowing a doc's office to schedule a ride for a patient at the time they make an appointment, as there are a lot of no shows
- another ex of network effects help solidify a firm as a winning platform
44
How Big Can This Thing Get?
Challenges include:
- regulatory concerns, maintenance of quality service, uncertainty of expanding in global markets where competitors exist
Analysts differ on Uber's valuation, but some speculate the firm may be laying the groundwork for expansion into a variety of logistics bizzes
- former CEO stated that he sees the firm as a "software platform for shipping and logistics"
- Experimented with bike messengers, restaurants, and say day delivery service
- Begun to test its own self-driving car tech.y
- The firm has shown a prototype vertical take-off and landing vehicle that a cross between a helicopter and prop plane
In Uber's favor are network effects
- riders will choose apps with more drivers and drivers will make money if they have more riders
Uber's growth concerns:
- Lyft put up growth numbers much stronger than Uber's recent declines
- firms has made terrible investments (auto-leasing program and Uber Freight Initiative)
- sloppy with excessive hiring and has had to cut jobs
if lyft and other rivals remain competitive, Uber looks more like a commodity and price competition will continue
