- [Scott Galloway]: Professor Arun Sundararajan
is the leading scholar
in the world on the topic
of the share economy.
Professor.
- [Arun Sundararajan]: Thank you Scott.
I live in New York City.
I don't own a car.
But sometimes I want a car.
How many of you own cars?
How many of you have owned
a car in the last year?
How many of you sold
your car before you moved
to New York City?
Yeah, so I don't own a car either.
It doesn't make sense.
But sometimes I want a car.
Sometimes I want to use a car.
And you know I walk down the street
and I see all these cars
sort of sitting on the street
and they're parked there for hours on end.
And I say to myself,
it would be really nice
if I could just pick up one of these cars
drive it around for a couple of hours,
and return it to its parking sport.
Maybe leave a $20 on the dashboard
with a note that says thank you.
The idea I'm going to talk to you about
is actually making that reality.
That idea.
That you don't have to own stuff in order
to use it.
And people are calling it
collaborative consumption.
The sharing economy.
Let me tell you what it's about.
Fundamentally, we are creating,
a bunch of companies are
creating internet based
marketplaces that allow people
to use each other's stuff
and to sort of consume
stuff that they don't own
but which they share with a sort of like
a loosely defined community of people.
So when I say that to
you you might say well,
internet enabled the market place
to get other people's stuff,
we've already seen that.
10 years ago.
Keep your eyes to this side of the screen.
That's the part I want you to focus on.
But the market places
that are emerging today
and there are a whole host
of sharing economy platforms
that are exploding.
They are going sort of
so far beyond their,
they're in the same verticals
that Craigslist is in.
But there are specialized market places
in these verticals that are making
shared consumption a reality.
Here is the basic idea.
For the last 50 or 60 years
our model of consumption
has been individual.
We choose what we want.
Sort of influenced in part by advertising.
If we want something, we
have to go out and buy it
and own it in order to use it.
And our access to the stuff
that we want is governed by
how much money we have or
how much credit we can get.
Okay so that's individual consumption.
In this world of collaborative consumption
that certain verticals are moving towards,
the idea is that what you want,
is governed not by advertising but by like
what you hear about from your community,
not necessarily your specific neighborhood
but your internet enabled community.
Rather than owning assets
you will have shared access
to things so like the same
asset is sort of accessed
by a number of different people.
And your access to it is
governed not by your credit
but by your reputation.
How well have you used the shared asset.
Now as this transition occurs
and we go from individual to
collaborative consumption,
the way production is organized
will start to move from
within corporations
that employ tens of thousands of people
to platforms that employ
maybe like a handful of people
but are fundamentally
connecting individuals
who have something that you
want or have some capability
or some asset that you want,
with people who need this asset.
So people who want stuff,
with people who have it.
And like, you know this is just a snapshot
of a whole bunch of industry verticals
that are starting to be changed.
That are starting to see
sort of a mainstream use,
of this form of collaborative consumption.
So I spend a lot of time,
with the sharing economy companies,
this is me visiting Lyft last year
trying to be a Lyft car.
I didn't fool anybody.
Didn't get any rides.
There is something things
that digital technology
can't do.
But there are two questions
that I get interested in.
One is how big is this phenomenon?
And two, is why now?
The idea of sharing has
been around for a long time
why is it happening now?
So I don't expect to have
a good answer to the first
question for a while.
And that's because I think
there are sociological and cultural
changes in how we consume
that are playing out
and will play out over the
next two or three years
that will affect the economic number,
so I don't believe any
of the numbers I see,
but here are some indicators.
There are 80 million power
drills in the United States.
Each of those power drills
gets used on average 13 minutes,
in its life time.
Last night over 150,000
stayed at an Airbnb.
That puts them in the league
of the big hotel chains.
If you look at the numbers of listings
this is the number of
people who actually stayed.
If you look at the number of listings,
they're comparable to the largest
hotel chains in the world.
Over four and a half million people have
contributed to a Kickstarter.
Over a million of them twice.
They have made over 10
million contributions.
In its lifetime, a car
gets used on average
8% of the time.
92% of the time it's just
sort of sitting there doing nothing.
And finally, the last number
that's the number that they tell me that
Uber will raise its
next round of financing
at a valuation of.
These are my friends in the Valley.
This is going to close soon.
But just to give you a sense for a company
that's less than four years old
that's the valuation that they are raising
there, hundreds of millions of dollars.
So the second question was
what's changed?
And here is what's changed.
I sketched this out on
my white board upstairs.
You can come and visit it if you want.
I see three things that have changed
in the last few years.
One is that we have gotten comfortable
transacting through
our digital interfaces.
We've been buying stuff
online for more than a decade.
And we're used to the idea
that someone on the
other end of the internet
has something of value
that they're willing
to share with us.
Cause we've been using
file sharing networks
for over a decade.
So there is this comfort,
that's one reason.
A second reason has to do with a trend
that has been playing
out over the last decade
called the consumerization of digital.
So in the 80's and 90's
technological progress
and development in the tech companies
was driven by the needs of business.
PC's, spreadsheets, word
processing software,
sort of ERP.
About 10 years ago,
we saw a shift where the focus shifted
to consumers.
Where now the big technologies
are being developed
not for business and adapted to consumers
but are being developed for consumers
and then adapted to business.
So this is a trend that
is fueling us having
really powerful devices
that are networked.
And the final thing that has changed
is that we have created
this infrastructure of trust
that is digital and upon
which we can layer a bunch of platforms.
These are not just the reviews
that we write for each other
on eBay or on Airbnb.
But if you think about it
what Facebook has done
is that it's taken all
of the real world social
capital that we have
and it's digitized it
and made it available
for people to sort of use
so you that you can use
this to sort of trust
just a little more,
that semi anonymous peer who
you might be transacting with.
When I was a graduate
student re-engineering
was all the rage and in 1990,
Michael Hammer wrote an article,
one of the most influential
HBR articles there's been.
And he pointed out that
with the advent of PC's
client server technology and ethernet,
companies could now
fundamentally rethink production.
They could rip out their old ways,
assembly line ways of doing work,
and reorganize work completely.
What I think we're on the verge of here
is a re-engineering of consumption.
We now have
those powerful network computing
devices in our pockets.
Our smartphones.
We have social media.
We have these platforms
that we can access.
And so we can fundamentally
start to rethink,
the way we consume.
It's almost like what Paul
Graham said on tax day this year.
Maybe ownership was just a hack.
It's sort of an inefficient
way of consuming.
But you have to own something
in order to consume it.
Maybe sharing is the future.
We just haven't had the technology yet.
And as people share more and more
as people rather than working
for large corporations
start to sort of like
becomes suppliers to these
sharing economy platforms
we might see a fundamental
reinvention of work
so in a decade you may not
be working for one company
for 12 hours a day five days a week,
you might be a supplier
of extremely valuable
skills and assets,
on a variety of different platforms
and have a much happier life.
I'm not going to have time
to go into what should
the incumbents do?
There is some regulatory
challenge that these platforms
are facing,
the new business models aren't
fitting into the old boxes.
This is sort of one front
on which the incumbents
are sort of dealing with like
these new business models.
I am heartened though
to note that
there is a recognition that fundamentally
this isn't just a bunch
of new business models.
There is a tremendous
amount of consumer support
and consumer value
being created
by the sharing economy.
And what organizations like peers
which is a new collective
that is trying to sort of
gather together consumers who participate
in the sharing economy
and make their voice heard
in the regulatory debate,
it's heartening to see
that this really important
component of what should
our regulations be,
how should our cities be run,
is not just being duked out
between the tech companies
and the incumbents and
the government officials.
That sort of a consumer
collective enabled by
an internet platform,
is also going to be a big
part of the conversation.
I was at the U.S. conference
of Mayors in June, in Vegas.
250 Mayors, me and actually
300,000 people were there for
a rave as well.
It was quite a gathering.
The highlight and why I was there,
was for a session that sponsored
the sharable cities initiative.
15 mayors from major
cities around the country
have said that they are
going to sort of work towards
altering city regulatory policy.
Toward making their cities more sharable.
And if you think about the backdrop
of what you heard about this morning
about innovation in cities
you can build more asset efficient cities
if you use sharing economy principles.
Because you can get more consumption
out of fewer assets.
So this is important
not just for U.S. cities
but particularly for cities
in developing countries.
And cities in other parts pf the world.
My final thought was of a cautionary note.
As we start to participate
in these market places
more actively,
build these reputations
and these reputations
then become the gateway to
what we can consume.
Like your credit score
in the order/ship economy,
then we risk a sort of a form
of what Om Malik from Gigaom
calls data Darwinism.
You might sort of split
society into people
with good reputations and the people
with not so good reputations.
So this is something to watch out for.
There is a lot more that I'd
love to share with you about
the sharing economy.
I'm out of my very flexible nine minutes.
So here is where you can find me.
Thank you.
Thank you.
