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Why share and share alike makes a great business model

Why share and share alike makes a great business model

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Urban density, the stagnant economy and the sensors revolution are stoking Web 2.0 entrepreneurs centered on allowing people to find new value in unused assets.

SAN FRANCISCO - The quintessential example of how sharing an asset can be at the center of a business is probably the Zipcar car-sharing organization, but there are three forces accelerating the rise of more and more U.S. start-ups focused on the "swap, rent, share" philosophy.

"Access will triumph over ownership," said entrepreneur Lisa Gansky, author of the book "The Mesh: Why the Future of Business is Sharing." Gansky spoke about the asset-sharing business model during the recent BSR Conference 2011 here.

Three factors are converging to accelerate the penetration of businesses focused on the sharing model that first really gained visibility in Europe in the form of car-sharing clubs, Gansky said.

  1. Urban density: As more people move to cities, there is less space for them to store their stuff of all sorts, especially big items like automobiles that are only used roughly 8 percent of the time. While it took Zipcar about six years to build up to 1,000 cars in its network, it the U.K.-based WhipCar about six months to build up to the same number, she said. "The waste for one system becomes food for another system," Gansky said.
  2. Stress from the stagnant economy: "People are rethinking the relationship between cost and value," Gansky said. That means things that are considered assets become liabilities when they are not used. That, in turn, causes people to think at least twice before a big-ticket purchase like a car that sits idle for 92 percent of the time. Another example is Quirky, which bills itself as a "social product development" company. Inventors and designers bring their ideas to the site, but they aren't actually brought to life until there is enough interest, which cuts down on the potential for production overruns. It also encourages products that have a true consumer following. An example is Pivot Power, a flexible power strip that began life on Quirky and has since transcended to Target and Best Buy, Gansky said.
  3. The rise of sensors: Information technology is at the heart of successful "share" models, and sensors are a critical part of that mix because they allow us to track and know where physical things are -- or will be -- at a given moment in time. "I think that the reason Zipcar is winning is that they are in the business of information, not transport," Gansky said.

Aside from the companies mentioned above, here are several other examples of companies mentioned by Gansky during her talk that owe their inspiration to the "rent, swap, share" philosophy. (You can also consult The Mesh directory for other examples.)

  • Kickstarter: Technically more of microfinance organization than a sharing model, this site supports the creation of artistic projects.
  • Loose Cubes: Helps you find a place to work at a company that might have cubicles that would otherwise sit empty.
  • Rent the Runway: A site where people can rent designer dresses, gowns and clothing for events, rather than buy them outright.
  • ThredUp: A platform for sharing outgrown children's clothing.
  • Airbandb: An inventory of apartments and rooms that travelers can rent as an alternative to hotels.

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Heather Clancy

Section Editor

Heather Clancy has written for United Press International, ZDNet, Entrepreneur, Fortune Small Business, the International Herald Tribune and the New York Times. She holds a degree from McGill University. She is based in New Jersey. Follow her on Twitter. Disclosure