TaskRabbit announced a new service in late May branded TaskRabbit for Business through which it will broker temporary labor for businesses. Having built a bullpen of what the company claims are over 10,000 vetted individuals available for “temporary jobs that take multiple days, weeks, or even months to complete,” according to the company’s website, TaskRabbit has pivoted from being a matching service that pairs someone with a few spare hours to a person who has an errand, into a full-blown temp agency.
Like other darlings of the “sharing economy,” “the gig economy,” or whatever neologism you favor, TaskRabbit has benefited from a labor market in which a lot of idle resources aren’t being allocated efficiently. TaskRabbit has collected a critical mass of mostly idle labor, added a layer of administration, and is now marketing this as a business resource. Its kin, from Airbnb in accommodation, to the many entrants in the ridesharing sector, to services built around everything from sharing toys to pets, have become an army of entrepreneurs taking on this reallocation task in a very soft market. It’s a market full of potential customers who need assistance, a place to stay, or a ride to the airport, and people holding those idle assets, such as an apartment, a car or their own time.
This newest tranche of web-driven companies are only the latest iteration of businesses that seek to make money off of other people’s “underexploited” assets. Much of Web 2.0 was built on companies putting up scaffolding, and users supplying a great deal of the valuable content. For example, Yelp succeeded in doing this with business reviews. Everyone has an opinion, and Yelp just provides a venue for these opinions. Likewise, everyone has pictures, and Flickr just gives us public photo albums. We all have friends, and Facebook just gave us a place to keep them close at hand. Users bring the goods, and Web 2.0 provided the shelves.
Many people are in need of extra income in a down economy, with high unemployment, cuts to unemployment benefits, and expensive properties to maintain. Until the 1099s (a tax form used to report self-employment income) hit, or a user winds up on the wrong end of the sharing deal, it seems like a win-win situation.
Until recently, regulators have given these companies a little rope. Matching buyers and sellers in the form of classified ad services like Craigslist act like an offline flea market, and the law tends to turn a blind eye to flea markets, unless they also feature prostitutes alongside the bric-a-brac. User-generated reviews of businesses as featured on sites like Yelp are fine, so long as users voluntarily submit them, and the bad is posted along with the good. There is a certain amount of information arbitrage that regulators are happy with, so long as that information is gathered and sorted within norms.
But when “hosts” started ignoring real estate covenants or local laws to share their spare space for money, the powers that be have taken an interest. Car- and ride-sharing startups have also faced an increasingly uphill battle, running into transport-for-hire regulations meant to keep the taxi industry in line and fly-by-night operators out. The response from sharing startups has largely been along the lines of “you old people don’t understand, the world is changing around you,” as if being part of sharing economy magically conveys special disruption status.
There are doubtless individuals and companies who are making a lot of cash out of the sharing economy (for example, various estimates put privately-held Airbnb’s 2012 revenues between $150–$180 million). The internet was supposed to be all about peer-to-peer—cracking the brittle edifices of monolithic corporations and returning power to people, or, maybe just offering an opportunity to make a little money on the side. Just like with the neighborhood Auto Trader magazine, some people will make a little money every now and then, and others will turn it into a business.
But a gap is emerging between the lofty rhetoric of companies who promise to unleash collaborative economies and create a world of “micro-entrepreneurs,”and those who are actually benefitting from this new way of harnessing labor and assets. Management cashing out in IPOs or selling to bigger, hungrier players who desire that freely-built content or database of names, aren’t exactly sharing their payout with the creators of all of that content. You, with the spare bedroom, get a few hundred dollars. They, as marketers of that spare room, walk away with millions. As the saying goes, “If you’re not paying for the product, you are the product.“
Yes, the people who use these systems are free not to do so—their participation is voluntary, and everyone who shares and collaborates ticks the “terms and conditions” box as part of that participation and agrees to the business model on offer. The big-name entrepreneurs of the sharing economy call this an “us vs. them” fight, with “them” being the traditional economy’s defenders: government, big business and so on, and the “us” of this struggle ultimately being both the asset owner and the consumer.
For this bargain to work, however, these sharing businesses are going to have to go a lot further in bringing their suppliers—you, the sharer, errand-runner, reviewer, or blogger—along for the ride, or risk a growing backlash among suppliers, customers, and communities that don’t like the way these companies’ view local laws or taxes.
It’s important to note that, despite favorable economic winds for the sharing businesses, only a small minority of the population has shown enough interest to trust these sharing models to transact over and over. New data from market research firmIpsos shows only 17% of US adults have shared an asset such as a tool, apartment, car or skill, and only slightly more than half of those who have participated would recommend it to others . (Interestingly, making money from sharing something ranked second in motivation among “sharers,” behind helping others.)
These numbers don’t exactly indicate a highly “sticky” service. Yes, there will be hardcore users who fashion a lifestyle out of sharing, but the mainstream remains to be convinced, and perceived shenanigans by the purveyors of sharing services will make that convincing harder to do.
They may also risk new entrants displacing them with a better way to treat their user and supplier communities, or the economy improving sufficiently so that people are less reliant on cashing out the extra room or renting out the dog for the weekend. And, of course, little prevents customers from doing deals on the side, cutting out the e-middleman.
Disruption hits everyone, right?