Is 'collaborative consumption' capitalism reconsidered?

Rachel Botsman is the force behind collaborative consumption, a revolution of skills and asset sharing through network technologies that is set to radically transform the way we live, work and consume. Rachel has delivered talks at The Clinton Global Initiative, numerous TEDs, HP, Google, No. 10 Downing Street, and come June, Amplify Festival 2013.


Marcus | Speaking about the rise of collaborative consumption (CC), you have said that, “Instead of consuming to keep up with the Joneses, people are sharing to get to know the Joneses”. On the other hand, Adam Smith famously wrote, “It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest.” I would have thought it’s economics and not community relations at the heart of CC. 

Rachel | You know, it often makes people uncomfortable when I say this and I’ve been derided as a capitalist who doesn’t really believe in the core principals of CC, but the thing is, you have to be realistic about what motivates people and at base, we’re wired, as you pointed out, to think self-interestedly. That said, even if people first engage in CC to make or save money, what sustains them is actually the social component. I think this speaks to a mega-shift in the way we think about community connectivity in the age of the internet 2.0.  

By the same token, the biggest misconception of CC at a corporate level is that the community benefit “getting to know the Joneses” is the primary outcome, not profits. Among a handful of cities with a corporate culture that can see the pay off from CC is Seoul. The rise of CC in South Korea is based on a sound economic principal more than the virtue of sharing. South Korea’s embrace of CC speaks to how large corporations can turn a profit by using technology - and South Koreans are very tech-savvy people - as a tool to unlock underutilised assets. 

That’s funny, I would have thought you’d cop ‘hippie’ more often than ‘capitalist’.

[laughs] When my book came out, one of the most frequent questions was “How is CC different from communism?” to which I used to say “This is hip, not hippie!” I actually had to work really hard to keep a distance between CC and the connotations of the bartering system. It’s not that I don’t believe in the value of the bartering, only that I think one of the glaring mistakes the green movement has made is alienating the majority of the population - the critical mass - by colouring everything in a deep shade of green. My approach is to promote CC as a viable mainstream model. I’m only too happy to see companies making millions of dollars servicing the CC market. Historically we’ve thought that big profits mean compromised values but with all the opportunities for new enterprise offered by CC, we’re starting to see companies generating profit with a purpose. 

But just how mainstream is CC? Early-adopters tend to receive more than their share of positive media attention. I wonder if it’s just broke young urbanites who will want all their own stuff again as soon as the economy recovers.

CC has really exploded in the last 18 months, not just in growth, but people’s understanding of just how widely applicable it can be for different verticals. Consumer behaviour goes hand-in-had with the user-friendliness of new technologies. So as people become more tech-savvy, they can begin to re-imagine how assets are utilised (e.g. finding a GoGet car that’s nearby using a smartphone). Yes CC is popular among urban elites but the line of stakeholders stretches from a city mayor who’s re-imagining how welfare is provided to the CEO of Ford who sees that private ownership is on the decline, and it’s time to invest in car sharing.

But GoGet users are typically young urbanites who are unlikely to purchase a car anyway. What about the cashed-up baby-boomers looking to retire in comfort and style?

We’ve got nearly 4 years of data now, and the thing that surprised me most was that the take-up rate is not overwhelmingly skewed to milennials. The breakdown of the data shows a fairly even spread but retirees are actually the category that stands out. Retirees have all the key components: time on their hands, expensive assets that are under utilised, and a desire for new social connections. One third of all the Task Rabbits out there are retirees. There are actually more people on AirBnB over the age of 55 than there are millennials. So, yes, while car sharing is most popular among young people, social lending is biggest among the 65+ category. These are people with considerable life savings saying, “Hold on, I can get 10% interest on my savings if I lend via a peer-to-peer platform, so why am I keeping it tied up with a bank?” 

And what does the data say about socio-economic diversity?

Skill-share platforms are particularly popular among people without a formal higher-level education who are unemployed or underemployed. I think it’s hugely exciting when these people suddenly realise they have skills that have a demand. Another interesting data point to consider is the geographic spread. We’ve recently relaunched collobrativeconsumption.com and we now have consultants from 18 countries all around the world. The most active markets are at both ends of the economic spectrum. On the one hand it’s the United States, Germany, and the other usual suspects but on the other hand it’s Kenya, Israel, China, Brazil. It’s really fascinating. 

If CC is gaining traction across the breadth of the economic spectrum and exclusivity is an essential aspect of luxury, what’s the future of luxury?

That’s a really good question. There are peer-to-peer lending platforms for luxury products like handbags and sports cars but there are also joint ownership of everything from solar panels to yachts. Given the primary historical value of luxury goods has been to signify status, as access to these so-called “aspirational goods” opens up, I’m interested to see whether the value in luxury actually declines. I mean, could CC be the catalyst for re-imagining self-expression? You know, I often think about that scene in Sex and the City when Carrie’s interviewing for a new PA and she asks “How does an unemployed girl afford a patchwork Louis Vuitton bag?”  “It’s rented. Girl, stick with me, I’ll hook you up.” Needless to say, she gets the job. People are proud to say that something is rented and that next week they’ll have something different. Nowadays the real cache is being on-trend -- both with the latest bag and the latest way of acquiring it -- rather than being cashed-up. 

Saving the environment, saving money, saving the community. Which of these is your driving motivator?

Actually, it’s none of those. It’s empowerment. My career focus, even before my involvement with CC, has been empowering people to have a voice, a choice, rights. My motivation is the constancy of self-actualisation stories that I hear working in this space. It’s the AirBnB hosts who say they’ve made new friends for the first time in years, or how the extra income has allowed them to pursue their creative projects. Yeah, it’s stories like these that keep me going. 

What are the stumbling blocks you see in the road ahead?

[laughs] You’re right to ask, because no major innovation happens without stumbling blocks. There’s a motion that revolutionary movements go through: first people are like “What the f*** is this?” then comes excitement then cynicism. If something comes on fast, and CC has come one extremely fast, people are quick to deride it as a fad. The second is regulation and policy. The problem arises when we try to regulate this new world with old world thinking. Many of the big CC enterprises (Uber, Lift, AirBnB) are being scrutinised and potentially facing shut-down. The problem with regulation is that it’s different from region to region and the way we think about regulating assets was drawn up in an industrial era of private ownership where companies, not people, provided services which were governed by consumer protection. Related to this are tax and insurance issues. For example, when does lending money or hosting someone at your house or running someone’s errands become a business? 

We need to start thinking about new frameworks to support this new economy. In the movement’s early years I did a lot of work with venture capitalists bringing them around to the idea and now I’m spending a lot of time with government policy makers who are in reactionary mode. Rather than rolling out red-tape and policing new growth, governments need to be forward-thinking like Seoul, like San Fran, like London and create a vision of a sharing city. Australia is a beat behind in this regard. But that’s not altogether a bad thing. I mean, the demand for CC is here and when government and business find a way of working together, there will be so many new enterprise opportunities for willing entrepreneurs. As it is now, it’s just criminal the number of bright young Australians leaving this country because the venture capital community here is so conservative. I know there are a number of innovation incubators around, but that number needs to be much higher. I would argue the most pressing change needed in Australia is for policy makers to shift to a model of outside-in innovation, that is, realising when you don’t have all the answers and working in partnerships with outsiders.

Well, “Shift Happened, Transformation Required” is the theme for Amplify Festival 2013, so we look forward to hearing what you have to say in June.  

[laugh] Me too, I’m really looking forward to it. 


Rachel's keynote details:

The Reputation Economy: Savvy use of personal data for Financial Services innovation
6 June 2013 12:00 to 12:55
Amplify Festival 2013 | June 3 - 7

Image Credits: 1, 2 3, 4

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