Debbie Wosskow, founder of the Collaborative Consumption Europe group and CEO of Love Home Swap has produced a report on the sharing economy for the UK government. Does Ms Wosskow carry a good enough argument against which both entrepreneurs and government can come together for mutual benefit? The short answer is no.
Preamble - I really wanted to like this report but in the end I found too many holes, too many loose assumptions, far too much reliance on populist thinking and not enough intellectual rigor.
Let's start with what the PR presents to us: In her report, Wasskow makes the following recommendations:
- Creating more carpooling lanes in high congestion areas, for example, between the cities of Manchester and Leeds. There is strong evidence emerging that ridesharing and carpooling can reduce congestion and pollution while delivering a better service to consumers.
- A start-up incubator and innovation lab for UK sharing economy platforms supported by Nesta and Innovate UK.
- Recognition that using online platforms to make money boosts skills and experience. As such, Jobcentre staff should promote these platforms and encourage jobseekers to use them.
- Ensuring fair terms of entry to the accommodation market, so that someone renting out a spare room for a few nights is not subject to the same level of regulation as a business renting out 100 rooms all year-round.
- Establishing a voluntary sharing economy trade body and a ‘kite mark’ for responsible sharing platforms.
The report has been welcomed by Richard Branson who is quoted as saying:
The UK has an opportunity to be a leading example in the international sharing economy market and today’s recommendations are a very sensible step towards this.
Business, Enterprise and Energy Minister Matthew Hancock was positively effusive, saying:
We will back the innovators, challengers and agitators nationwide who are tearing up traditional business models and creating new jobs across the country.
The Government will respond to the review in due course, but for now I would like to thank Debbie Wosskow for all her hard work and for flying the flag for these exciting, new online businesses, which pump money into households and make life easier for people.
What's Wasskow's central argument?
The sharing economy allows people to share property, resources, time and skills across online platforms. This can unlock previously unused, or under-used assets – helping people make money from their empty spare room and the tools in their sheds they use once a year. It allows people to go from owning expensive assets, such as cars, to paying for them only when they need them. Individuals can make more from their skills, and work more flexibly.
There has been tremendous growth in the sharing economy in recent years, and this is set to continue. This is a huge opportunity for the UK, and our ambition should be to be the world’s leading sharing economy.
There are plenty of statistics to bolster this view including one prediction from PwC that the current UK revenue rate of £0.5 billion from this sector will reach £9 billion by 2025. As backdrop, PwC pegs the current global sharing economy at $15 billion, rising to $335 billion in the same time frame.
Wasskow is cautious to ensure the government angle is not missed:
As with all disruption, we also need to be careful. Sharing economy businesses and traditional operators need to be treated fairly, particularly in terms of regulation. Consumers must be protected, and trust must be strengthened in online transactions. However, a degree of caution should not stop us from embracing the potential sharing offers for a new, more efficient and more flexible economy.
What's not to like? Quite a few things.
It doesn't stack up
While I have little difficulty in understanding the motivation behind many of the initiatives referenced in Wosskow's report and like the broad strokes argument of unlocking under utlized assets, the brutal fact is that most of the referenced initiatives are very small scale with little chance of long term success. But my critique starts far earlier.
The major assumption underpinning this review conflates two similar but different concepts: the collaborative economy and the sharing economy. As Rachel Botsman points out:
You may have noticed the terms “sharing economy,” “peer economy,” “collaborative economy,” and “collaborative consumption” being used synonymously. Ideas like “crowdsourcing,” the “maker movement,” and “co-creation” are being thrown into the mix. The space is getting muddy and the definitions are being bent out of shape to suit different purposes.
This may not matter in the short term as we see more me-too ideas popping up as websites with click and join capabilities but matters a great deal when the business starts to scale.
By including services like Zipcar in the report mix, Wosskow makes the fundamental error of misunderstanding a business-to-consumer (B2C) platform of the kind Zipcar represents against the person-to-person (P2P) economy venture that her business represents. This is important because if we take the AirBnB example - also referenced in the report - it is clear that the B2C platform that supports sharing will win, at least in the short term. Why?
Resources speak louder than PR
AirBnB is well funded and can market to a huge, global audience. Local endeavours may work in the short term but if history teaches us anything, deep pockets and global presence matter. A lot. In the sharing economy this matters even more because trust is the only real asset that anyone or any operator has. It's barely defensible and only requires a string of hiccups in the early stage to be utterly destroyed. Therefore, building a strong marketing led moat against competitors has direct market impact.
So to describe the sharing economy as a 'huge opportunity' may be interesting but it misses the market driven point. Add in the fact that the lofty goal of leadership doesn't match the projected numbers (UK projected growth x18, global projected growth x22) and you have to wonder what this report is really saying.
Even if we assume that platforms like AirBnB can survive by virtue of their funding and attention grabbing capabilities, we have already seen that what starts out as a modest proposal to unlock unused assets quickly gets mired into difficulty. While the report takes note of the issues, and especially around insurance, attempting to corral all sharing economy participants as though they are a homogenous group is fanciful at best.
Sticking with AirBnB for the moment, it has been noticeable of late that in certain cities, individuals are getting market savvy to the point where rentals are on par with hotel prices. Is this a bad thing? Not for the owner who likely gets to make additional income for as long as the party runs on. The flip side is that despite the claims to disruption, I've not seen any evidence that hotel rates in popular destinations like San Francisco have been put under any pressure. If anything, hotel rates are on the rise, dragging up rates found in the sharing economy. How does this reality stack up against the altruistic ideals of a sharing economy? It doesn't.
In short, I am concerned that I am not seeing a call for sustainable professionally run business at scale, an absolute pre-requisite for the sharing economy. Instead, I am seeing a lot of amateur wannabes promulgated as the future of mom and pop operations.
From whimsy to fantasy
Calling for more carpooling lanes is an interesting idea but at what cost? What about the impact on existing infrastructure? Almost certainly a non-starter.
One assumption made by the report is that charitable organizations like Nesta can act as incubators for innovation and all that goes with it. I have yet to see a single example of non-profit organizations successfully fostering any for profit business at scale. While the sharing economy may be predicated on micro business participation, someone, somewhere has to own the platform that supports such ventures and to date, the only successful platforms are those that are massively funded by the private sector.
The suggestion that Jobcentres encourage job seekers to latch onto sharing economy platforms is borderline laughable, if not tragic in their misconception. Exactly what are jobseekers supposed to do? Offer a carpooled ride to the Jobcentre? In what? The BMW that's languishing on the front yard? Where would they park? How about renting out their spare bedrooms (which are likely subject to bedroom tax) to other travelers? Where is the demand?
As the report gathers pace, the scattergun approach that conflates the sharing economy becomes ever more fanciful:
Public sector organisations have started finding efficiencies by sharing back-office functions such as HR – but this is only the beginning. Businesses such as BrandGathering demonstrate what can be achieved here. BrandGathering is an online platform that connects businesses to undertake joint marketing and branding activities – helping them to save money, but also to capitalise on each other’s networks and customers.
I could almost forgive the egregious conflation of sharing and collaboration if it wasn't for the fact that according to BrandGathering, the total amount saved by business to date is £1 million. It may be a start and I'll put aside the dubious values placed on PR and placement content...but it is a rounding error generated over two years. If this sounds picky then you have to put it into context. WPP forecast UK ad spending at £14 billion in 2013.
The government angle
Over and above all of these commercial concerns is talk of introducing a regulatory framework. Again, history shows that regulation leads to ossification. Today, I would argue that the UK's tendency to slavishly follow the US example is anything but a good idea.
Put that aside for one moment and I am left wondering if anyone has thought through how regulation will fit for the main sectors identified in the report. My guess is that topic will exercise the minds of government thinkers between now and next Spring, the date by which UK government is committed to providing a response.
Which leads me to my last observation. Ms Wosskaw pitches herself per the report as:
Debbie Wosskow is an entrepreneur, investor and sharing economy expert. CEO of leading peer-to-peer travel club, Love Home Swap, Debbie is also the founder of the influential Collaborative Consumption Europe network. A former management consultant, she launched her first business, marketing and communications consultancy Mantra, at the age of just 25.
I have no doubt that Ms Wosskow is a smart person with good intentions but her claims don't match up to her LinkedIn profile. There, she makes no claim to being a management consultant, although we've subsequently been told by Ms Wosskow that she worked for Oliver Wyman as an Oxford graduate for two years from 1995 on the Oxford graduate intake and and at Maidthorn Partners, which was a management consultancy. Mantra was sold in 2007.
One would have thought that a person commissioned by the government might have a better track record, or at least a track record backed with some rigor. Instead, we find that her background is marketing and PR. As a long time observer of the enterprise, I am thoroughly tired of PR. Customers and, I suspect consumers, want facts upon which they can rely.
The sharing economy is very young and Ms Wosskow's report is typical of those that corral early stage initiatives. Extrapolating those observations into a future reality is fraught with risk.
I am left wondering whether best intentions in mind, Ms Wosskow has been set up to fail. It's not her fault. Her conclusions would be self evident by anyone with a vested interested in a piece of the economic pie. It is but one more glaring example of ill considered government group think on a topic that at best will get marginal attention, which will attract headlines for a moment in time but which will ultimately fail.