Sharing is caring: clean out your spare room, there's money to be made from a consolidated economy

Fancy making a fast buck out of your spare room or an empty seat in your car? Enterprising Londoners are hooking up to take advantage of one another’s surplus skills, time and space. But could this trend revolutionise society as we know it or disrupt the entire economy? Richard Godwin investigates
9 August 2013

Depending on who you talk to, collaborative consumption is either the future of society or a mortal threat to the economy; a new business model or the most oversold idea since MiniDiscs; a digital form of bartering or just a cool way of going on holiday. For the true believers, the possibilities are boundless.

‘I think we’re just at the very beginning of a revolution,’ says Joe Gebbia, one of the founders of Airbnb, a website offering rented accommodation, and perhaps the most striking example of collaborative consumption in action. ‘Imagine in the 1800s when the first railroad tracks were being laid and the telegraph [wires] were going down. They built an infrastructure that would provide the foundation of our lives now. You could draw parallels with what’s happening right now.’

The principle of collaborative consumption, or ‘the sharing economy’, is simple. Ordinary people meet over the internet, establish trust and then share services, resources and skills. Most of the time, money changes hands. Airbnb, for example, takes six to 12 per cent of the guest’s fee and three per cent of the host’s.

The company, which launched in 2008, allows people to rent out their spare room, apartment, houseboat, palazzo or igloo to strangers, effectively turning them into freelance hoteliers. It now has 250,000 listings in 192 countries, with 5,416 hosts in London alone, and is worth about $1.3 billion. According to Rachel Botsman, co-author of What’s Mine is Yours: How Collaborative Consumption is Changing The World, the model can be applied to just about anything. ‘Technology unlocks the idling capacity — that could be the spare room in someone’s house, the spare seats in someone’s car, investments that you don’t have in a bank.’

Botsman’s favoured term is ‘the great disruption’, which carries with it both a wide-eyed utopianism and a threat to the established order. For if Airbnb has ‘disrupted’ the hotel industry, a new generation of digital companies are trying to disrupt everything from banking (see the peer-to-peer lending service,Zopa) to business rentals (witness Hire Space, which lets you hire out non-residential space such as offices or studios).

Lyft (currently operating in four US cities) allows you to sell excess capacity in your car. Then there are the services for airport hire cars (FlightCar), bicycles (Social Bicycles in NYC) and boats (GetMyBoat). In San Francisco, Postmates allows you to sell excess capacity in your rucksack, turning anyone with a bike into a freelance courier.

Collaborative consumption can also be applied to intangible goods, such as time and skills. TaskRabbit, which is yet to launch in the UK, allows its users to compete to complete tasks for money. Its most active American users claim to earn as much as $5,000 a week, with a large part of their income coming from cleaning and dog-walking. People will pay good money to get something done precisely when they want it.

‘Beyond the tech community and the early adopters, the public in general is starting to realise that these sites do exist and they are viable,’ says James Pursey, who has recently launched Sorted, a collaborative consumption business based in London. His site reverses the TaskRabbit model: rather than users advertising jobs they need doing, it’s the task-doer who does the upfront work by creating a profile detailing their skills and rates. ‘In two years from now, not only will these sites be hugely popular, but they will be operating on mobile devices, too — which will increase the possibilities of what they can do even further.’

Botsman and others have argued that this marks a new phase in the internet’s evolution. So far, it has mainly been information companies that have seen their business models disrupted by digital technology: record labels, newspapers, publishers and so on. With the advent of mobile devices and social media, real-world services become vulnerable, too. If all you need is the Lyft app to find someone driving in your general direction just at the right moment (with a decent approval rating, of course), why hail a cab? You can see why taxi drivers (and hoteliers, postal workers and employment agencies) may not see it as such a wondrous thing.

However, Pursey believes that existing professionals have little to fear. Just as a traditional B&B owner might choose to advertise on Airbnb, he hopes that, in time, a professional cleaner will use Sorted to sell their services directly. ‘Employment agencies take a huge proportion of the headline price. I saw one the other day that was charging £10 per hour for cleaning but was paying its cleaners the minimum wage, clawing back every penny it could. What’s the benefit for the cleaner there? Wouldn’t it be much better if they could keep all that money? And wouldn’t the person hiring them feel better, too?’ Sorted charges a £4 booking fee for all tasks and, like Airbnb, it holds payment until the user confirms the task is done.

The economics commentator Thomas L Friedman recently wrote an excitable testimony in The New York Times, declaring the sharing economy will create a new generation of ‘micro-entrepreneurs’ who share aspects of their life as and when they are needed.

Sarah Connor, a 30-year-old theatre director living in Hammersmith with her fiancé, recently moved into a two-bed flat where the rent was beyond what they could afford; however, they did so on the basis that they could make back the rent — and save for their wedding — by subletting the spare room for £30 a night on Airbnb.

‘For most people in our situation, renting is no longer viable in London if you want to live anywhere remotely central,’ Connor tells me, on the condition that I change her name (her landlord is unaware of her scheme). ‘Ever since I arrived in London in 2007, every aspect of a freelance life has become more expensive. You have to be so creative to make it work. Airbnb helps us to survive.’ In three months, they’ve paid rent and saved £1,500 for their wedding.

Talking to Connor, you get an idea of why this is so far-reaching in its implications. Airbnb was designed for travellers looking for cheap accommodation; for Connor, it is a solution to living in a post-Crash economy in one of the most expensive cities in the world. In addition to being a freelance hotelier, Connor hires out her skills on the employment website PeoplePerHour, and uses eBay assiduously. When she can, she lives without money changing hands at all. ‘I have a friend who’s an editor — she edited something that I wrote for free and, in exchange, I did some gardening for her. We are a bartering generation. My friends and I would not be able to survive without it.’

For many, collaborative consumption sites provide a far more convenient way of working. I speak to Lola Garcia, 29, who came to London from Spain in 2008 with the hope of becoming a photographer. When she became pregnant two years ago, she realised childcare was too expensive to allow her to work full-time, so she started cooking for Housebites, a startup that styled itself ‘the Airbnb for takeout’. The idea was that you could have someone else’s home cooking — in Lola’s case, traditional Spanish dishes — delivered to your home.

‘It wasn’t crazy money, to be honest, but it was just enough to help my rent. And it was perfect because I got to work from home and look after my son,’ she says. Housebites recently suspended its operations (no one said all sharing economy ideas were guaranteed to succeed), so now she hopes to make extra money by hosting dinner parties at her Deptford flat through the newly launched EatWith. ‘It’s going to be difficult, because I live in a tiny flat,’ she says. ‘But it’s a great idea. These sites allow me to do everything in life that I really want to do.’

Naturally, the idea of non-experts sharing can be problematic. What if your Lyft car crashes? What if your Postmate loses your passport? There have been troublesome cases in Airbnb’s history. One Stockholm property was allegedly used as a brothel, while many New Yorkers have been evicted and/or prosecuted for contravening city bylaws that prohibit subletting. In San Francisco, Airbnb stands accused of avoiding the city’s tourist tax.

Even if Gebbia sidesteps questions of regulation, he can point out that Airbnb has introduced an insurance policy, guaranteeing homes for up to £600,000, recognising that the more secure its hosts felt, the better it would be for all. Meanwhile, it all but forces its users to interact using the site’s own messaging system, meaning that transactions are easier to track. It describes itself as a ‘social networking’ company rather than a hotelier. Ultimately, its intention is to create trust between its users, with everyone’s online reputation made as transparent as possible.

In this sense, according to Gebbia, the sharing economy is a way of reversing a wider societal trend towards mistrust. ‘In the post-war United States, you had this race to the suburbs. Cities shrank, the suburbs got bigger — and the notion of community changed drastically. You went from all being very close together to all being spaced apart and slightly suspicious of one another. If you couldn’t trust your neighbour, you had to be able to put your trust into something — and that’s where brands came in. It gave you a promise: you’re going to get a certain level of quality. Where we are today, because we’ve been able to engender trust between individuals, the role that a brand can play isn’t as important any more.’

Previously, people trusted members of their own neighbourhood community. Now they put their trust in star-rating and online testimonies. ‘If you ask your grandparents how they travelled when they were young, they will generally say that they stayed in farms, guestrooms, boarding houses,’ says Gebbia. ‘The hotel industry is a very modern invention — it only really started to become branded in the 1950s. We’re bringing back the way things used to be but using the intelligence of the internet.’

Love thy digital neighbour? It could catch on.

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