Uber and Airbnb are a couple hot names in business. They run on models that break from the traditional structure where businesses have a product to sell. Uber and Airbnb thrive on a share economy. What does that mean, exactly? What can blossoming minds in business learn from them?
The Share Economy — How It Works
As Forbes defines it, a share economy is when “owners rent out something they are not using, such as a car, house, or bicycle to a stranger using…peer-to-peer services.” Uber, Airbnb, Snapgoods, and DogVacay are all examples of businesses that work on this system.
Using share economy businesses is generally safe, and owners of goods that build a solid reputation can make a significant income. The parent company also benefits by taking a cut for helping people connect with each other.
According to The Economist, one expert estimates that the peer-to-peer rental market is worth around $26 billion.
Benefits for Businesses and Participants
One of the primary benefits for the businesses that manage peer-to-peer connections is that they don’t have to create any products of their own; they use what others already have. Of course, they have to manage these assets. For example, Airbnb sends photographers to take snapshots of new rentals. Uber has to enforce standards about the type of cars that are acceptable under their service. Overall, though, processes are fairly simple.
Participants — both owners and renters — benefit as well. Owners get more out of underused assets, and renters may end up saving money.
There is also powerful networking potential in share economy businesses. Many professionals use Uber, and Uber drivers can chat with those professionals, getting leads on job opportunities or good deals on products. Airbnb users forge connections with people who live in the area where they’ll be visiting, making for richer vacations.
Sometimes, share economy businesses even touch the heart. For example, with DogVacay, pet owners can leave their furry family members in a cage-free environment where the dogs will get personal attention. The pet owners have no reason to feel guilty about leaving Spike or Max behind for a while.
Hurdles for Share Economy Businesses
Uber is famous not just for its rideshare services, but also for its legal challenges. Taxi companies and other entities want to fight Uber’s expansion.
Another issue that some share economy businesses face is that of reputation. These businesses place their fates in the hands of strangers, and as much as they try to ensure product integrity, bad apples may still slip through.
Lessons From the Share Economy
What can business leaders learn from operations like Uber and Airbnb? Sometimes, you don’t need a product. You just need an idea and a way to market it. Helping people connect with each other is a powerful way to make money, and by helping people rent out their goods, you’re helping to create a new breed of entrepreneurs.
The share economy is still relatively young, but it doesn’t seem likely that it will disappear anytime soon. Indeed, Uber, Airbnb, and other peer-to-peer companies are spearheading a business revolution.
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