Tuesday, June 28, 2016

The Sharing Economy Is Dead. Long Live the Leverage Economy!

Let me start by saying that I am a customer and fan of the services offered by Uber (took a ride Monday!), Airbnb (recently booked a family member into a nearby property) and other so-called “sharing” companies. In fact, just this week I gave a presentation about customer experience in which I cited Uber as an example of what brands can achieve with customer-centric product and service experiences. So, I say this as a fan and not as someone who is either anti-tech or anti-innovation: The time has come for companies in the space to stop hiding behind the “sharing economy” label and to improve collaboration with all concerned parties. Failing to do so puts these companies at risk as the industry, customer relationships, and regulations mature.

A year ago, I mounted a passionate defense of the term “sharing economy.” At the time, I argued that the word “sharing” was appropriate given these business models facilitate the mutual consumption of assets in contrast to traditional individual ownership and consumption. While this is still true, I cannot shake the feeling that companies have gotten a lot of PR and are camouflaging risky corporate practices thanks to the humanist adjectives they use, including “sharing,” “collaborative,” “trusted community marketplaces,” “the crowd” and “connected.” Who can be opposed to those ideas? It’d be like hating motherhood and apple pie!

The problem is that few of these “collaborative” companies are, well, collaborative. For a while, this was easy to overlook, because many consumers agree that some of the regulations these companies flouted were unpopular and, arguably, unnecessary. For example, Uber bypasses municipal safety regulations in many cities, and most of us don’t care because we feel safer in an Uber than a taxi. (On my last taxi trip, the driver exceeded the speed limit by 25 mph and barreled through a late yellow light near to a phone-distracted pedestrian, and I reached for my phone to give a bad review only to realize I could not.)

Because we agree some codes are outdated and appreciate the much stronger customer experience offered by the startups, it has been easy to disregard how these companies unilaterally pick which rules they like and which they do not. Laws that shield the companies from unfair practices orprotect their intellectual property–yes, please! Laws requiring they follow standard background checks or adhere to local rental ordinances–hey man, can’t you see we’re trying to innovate here!?

But it is getting harder to ignore the dangers of self-determined laws and regulations. After all, while we give a wink and a nod to Uber snubbing livery laws, do we want the manufacturing plant in our town deciding which environmental standards they’ll ignore or food companies to go maverick on safety codes?

As citizens, we all are part of the greatest collaborative platform of all–no, not Uber or Airbnb but democracy. If people don’t like certain laws, they can petition their lawmakers to change them; if citizens are not satisfied with their elected officials’ response, they can mount a recall or campaign for their defeat. Unless we want companies to set their own laws based on what is best for stockholders (or a handful of VC investors hungry for rapid and sizeable returns), then we must question the green light we give to sharing economy firms to pick the laws they deem worthy.

It seems that green light may be turning yellow. Los Angeles charged a handful of landlords with illegally evicting tenants to convert their units to short-term rentals. The New York State legislature has passed a law that would ban Airbnb users from listing some short-term rentals. Chicago just implemented new (relatively mild) rules for Airbnb. San Francisco’s Board of Supervisors unanimously passed a law requiring Airbnb hosts to register with the city. And Austin residents rejected a plan to allow Uber and Lyft to self-regulate.

In response to the new regulations, the sharing companies and their supporters have too often returned to the same old scripts. They accuse officials of being in the pockets of traditional companies. They label new laws as anti-consumer (even as consumers are asking for them). And they accuse officials of being opposed to innovation. In short, these companies ignore that their industry is maturing and many stakeholders are now asking for actions to ensure safety, equitable tax collection, a level playing field for all players, affordable housing availability, and fair rules that protect residents living adjacent to high-traffic, unlicensed hotels.

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