Millennials in the Sharing Economy

The social economy is giving rise to a new consumer revolution.  In an era of connected consumerism, social media strategies are going to change your business.

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A friend expressed his disbelief the day he saw his 3-year-old daughter looking through a glossy magazine while “swiping” her finger across the cover photo in an effort to “turn the page”. Instead, nothing happened… of course, because it was a traditional magazine, which requires flipping or turning an actual page over, not swiping aimlessly like you would a digital screen!  Yet, in today’s world, this sort of behavior, or “digital literacy” seen among young people is more and more common.

The term “digital natives”, also referred to, “Millennials,” represents a generation born during the rise of the Information Age. Typically, these people are categorized as being born after the 1980s and who grew up in a world of increasing technology advancements. Although the “Baby Boomer” generation, named after the huge spike in U.S. births from World War II, is thought of as the country’s largest generation; in 2016, Millennials actually outnumber the boomers by 11 million people.  Furthermore, according to Forbes, Millennials represent about a fourth of the entire population, with $200 billion in annual buying power.  Therefore, understanding these generational traits have major implications for organizations around the world.

However, companies have been struggling to connect with this generation because many of the traditional methods of advertising have proven ineffective at capturing their attention. This resistance from traditional businesses is giving way to an understanding of the need to adapt and adjust to this “new normal”.

There is a review of data that shows Millennials have characteristics that set them apart. According to NPR, unlike their parents’ generation, Millennials are ushering in an age when minorities will lead the U.S. population. This is also supported by a shared Millennial trait of being a very ethnically and racially mixed generation.  Another shared characteristic among Millennials is civic-mindedness. Many define doing good with efforts related to protecting the environment. For example, according to a 2011 study by ad agency network TBWA/Worldwide and TakePart, 70% of young adults consider themselves social activists.

One industry offering a multitude of services aligned to these Millennials wants/needs is the Sharing Economy.  Today, many are continuing to discover the benefits of peer-to-peer exchanges of goods and services. For example, in regards to civic-mindedness, Sharing Economy ridesharing services like Uber and Lyft limit climate change by promoting sustainable travel.  Additionally, a sharing economy company such as Pley, a toy subscription  company, eliminates 10.5 pounds of CO2 emission for every toy it rents.  Home sharing companies also encourage sustainable travel. According to a study conducted by the Cleantech Group, trips that rely on home sharing companies, including bed-and-breakfasts, emit 66 percent less CO2 than trips using hotels, including hotels that have earned five-star efficiency ratings. This is because fewer resources are used to care for travelers.

In terms of being a very ethnically and racially mixed generation, corporations that hold contradictory views on political and social issues are at risk when it comes to reputation rankings amongst Millennials.  A prime example of this can be seen from the recent Chick-fil-A same-sex marriage controversy where the company CEO made public comments opposing same-sex marriage and resulted in protests and boycotts of the chain.  Regardless of the size of an organization, when it comes to using social and mobile technologies, one must work hard to build strong relationships with constituents, and to reach them wherever they are and at a moment’s notice.  To truly cultivate these relationships and to mobilize a base, organizations need to expand their outreach to include multiple online channels and tools such as social media, email, and mobile.  All of these platforms are experiencing explosive growth and will continue to gain momentum.

As the world becomes more networked, inclusive and diversified, more companies will need to  reevaluate their communication strategies and behaviors to reinvigorate their understanding of, and relationships with these critical stakeholders.

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Climate Change Control in the Sharing Economy

Sharing Economy Climate Change Control Ranan Lachman BlogThere is an incredible civil war going on throughout the world and a critical need for greater global awareness on the issue. Across much of the world, climate change is making environments less capable of supporting human life.

Recently, however, after more than two weeks of debate, nearly 200 countries have adopted the global agreement to cut and then eliminate greenhouse gas pollution collectively.  ABC News reports, “There were tears of joy at the United Nations climate change conference in Paris after world leaders agreed on an historic deal to cut emissions.” According to news from the National Post, in the pact, the countries commit to limiting the amount of greenhouse gases emitted by human activity to the same levels that trees, soil and oceans can absorb naturally, beginning at some point between 2050 and 2100.

The 2015 Paris Climate Summit is a helpful reminder that the Sharing Economy, which helps find more productive uses for underutilized assets, is having a positive, transformative effect on the environment.

For example, Sharing Economy ridesharing services like Uber and Lyft limit climate change by promoting sustainable travel. A sharing economy company such as Pley, a toy rental company, eliminates 10.5 pounds of CO2 emission for every toy it rents.  Additionally, home sharing companies also encourage sustainable travel. According to a study conducted by the Cleantech Group, trips that rely on home sharing companies, including bed-and-breakfasts, emit 66 percent less CO2 than trips using hotels, including hotels that have earned five-star efficiency ratings. This is because fewer resources are used to care for travelers.

Investors are increasingly intrigued by the potential of these sharing economy companies to radically upend both how we consume goods and how we work to afford them—whether it’s monetizing underutilized assets or forgoing purchase of those assets altogether.  

The rise of the sharing economy is a potent weapon in the carbon war.  One third of business leaders see the value in sharing best practice, costs and resources to improve efficiency and reduce emissions that would enable them to respond effectively to climate change.  But economic transformation cannot come from invention alone, it is also dependent on the adoption of new, innovative products and services across the economy.

Click to View: Importance of “Design Thinking” in the Sharing Economy

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Bottom Line Benefits from the Sharing Economy

Sharing Economy Ranan LachmanAccording to a recent Wall Street article, the sharing economy has already provided jobs to some 60,000 people, and attracted a total of $15 billion in funding. And the market is expected to double in the next year.  

Apparently, the sharing economy has been a hotbed for the “private IPO” trend – that is, private equity firms, venture capitalists, and international investors injecting huge sums of money into the sharing economy.  By relying on private investors for a longer period of time, start-ups get more runway to figure out sustainable business models. To delay their entrance into the public markets, firms like Airbnb, Dropbox, Palantir, Pinterest, Uber and several other large startups are raising hundreds of millions, and in some cases billions, that they would otherwise have gained through an initial public offering.

For example, following unlikely success in Cairo, Uber is now looking to capitalize on its growth overseas, investing $250 million in expanding its business throughout the Middle East and North Africa over the next several years.

Just last year, the company was having a difficult time expanding its service abroad, receiving pushback from the governments in Thailand, Vietnam and the Netherlands, for failing to comply with legal requirements for essentially operating a taxi service. In response, Uber maintained that its primary goal is to provide choices for consumers, build economies by employing more individual drivers, and develop better solutions to traffic jams, inadequate public transport or lack of personal vehicle, as is the case for many of its users. This is a conundrum for many players in the sharing economy, (i.e. Airbnb) which continue to find themselves hitting figurative walls in the legal sense, as demand and growth outpace due process and protocol for traditional business.

Nevertheless, since that time Uber has only gotten bigger and is now valued at $70 billion, a 79 increase from last year. With this new venture, Uber is planning to target new cities in Saudi Arabia, Egypt and Pakistan, showing no signs of stopping, despite legal roadblocks and sometimes unfavorable press.

Still, the company is not in the clear. Concerns about violence and political unrest still have many skeptics on edge about how the company will handle these very present issues. As a result, Uber has partnered with services like HarassMap, which trains drivers about sexual harassment, and has even worked with non-governmental organizations to solve disputes in Lebanon surrounding the location of a landfill, showing its commitment to building positive relationships in the communities in which it works: an undeniably sound growth strategy.

All eyes will be on the company to see what becomes of this project. Uber already faces stiff competition from local apps in the region, namely Careem, Ola and Didi Kuaidi but as Uber has proven even here in the states, it’s prepared to take on any opponent. Stay posted as we continue to explore how these massive investments translates to bottom line benefit. The jury is still out if at $70 billion Uber can see a huge pop in market valuation in public markets as some of the recent IPOs demonstrated a lower valuations than their last private rounds.

Sources:

  1. http://www.bloomberg.com/news/articles/2015-11-03/uber-invests-250-million-for-expansion-in-the-middle-east
  2. http://www.pymnts.com/news/2014/more-trouble-for-uber-overseas/
  3. http://www.nytimes.com/2015/08/06/technology/personaltech/the-international-answers-to-uber-and-lyft.html
  4. http://www.wallstreetdaily.com/2015/11/10/sharing-economy/
  5. http://www.nytimes.com/2015/07/02/technology/personaltech/as-more-tech-start-ups-stay-private-so-does-the-money.html?_r=0

High Growth & Disruption Trends in the Sharing Economy

Sharing Economy Ranan LachmanThere’s certainly compelling evidence for the benefits that the sharing economy can have for consumers. Recently, a report by Credit Suisse identified three types of sharing businesses: individuals selling or renting their own goods and services (Airbnb, Pley), membership platforms that allow people to easily rent items or access services (Zipcar, eLance), and collaborative sites on which people exchange mostly intangible services such as product reviews (TripAdvisor, Yelp) or knowledge, as well as more tangible things like funding (Kickstarter, Lending Club).

However, four sectors – business services, financial services, transportation, and travel and leisure – have proven most amenable to entrée by new sharing-based business models.

In finance, for example, peer-to-peer lending is growing 30 percent a year in the U.S. and Europe. If it keeps growing at that pace, it will account for 25 percent of loans to small and medium-sized businesses by 2025.  { this looks like more than article writing and not something they i’ll source out to find a quote as this is supposed to be my own words}

Additionally, with the number of people working on a freelance basis rising in the U.S., platforms that connect freelancers to employers (Upwork  and Freelancer) and collaborative workspaces that rent out work stations and offices on demand (WeWork, Workspace) should grow rapidly, too.

The following are high growth & disruption trends as expected in the Sharing Economy from a discussion among several thought leaders:

  • A shift is happening from old power to new power: New power harnesses the crowd in a highly decentralized way with a distributed and “sideways” business model.
  • For startups coming with new ideas that can harness the sharing economy: A prototype is worth a thousand meetings: Get to market as quickly as possible, play with models, and learn as fast as you can.
  • Trust is the new currency: How people are treated within your community and where they receive value is increasingly important.
  • Three “mega trends” will lead to radical new business values based on co-creation: The Internet of Things (IoT); Digital Manufacturing; and Machine Learning.
  • Maturity leads to creating a “service ecosystem” around your brand: Rather than focusing on one core product or service, companies examine the entire range of customer needs in the Collaborative Economy.

Although the examples of Sharing Economy companies range enormously in scale, maturity, and purpose, they share similar underlying principles essential to making them work.

Sources: http://www.businessinsider.com/credit-suisse-sharing-economy-revenue-335-billion-by-2025-2015-11 and Crowd Companies