I saw a report today that people don't think Apple is innovating anymore. Thank god. We're still in the early stages of what the iPhone has done to us.  

You could argue that the ability to make money out of your personal assets has been around for a long time (even though the courts are starting to take those rights away when it comes to digital assets). You could even say that the internet has been enabling a consumer-to-consumer marketplace since its inception, with eBay being the biggest success story with it's digital flea market. 

A note about the term “sharing economy”

You can tell that an area is new when the term isn’t even agreed yet. And because there isn’t agreement, I’ll use them all.

Consumer-to-consumer (C2C) is a useful way of talking about it, because it provides a helpful linkage to business-to-consumer (B2C) and business-to-business (B2B). But it also misses a major point: this is not yet an organized sector with rules that are understood by all parties. Because the barrier to entry is so low to being an entrepreneur in the C2C economy, there is a steeper learning curve (largely because people don’t know that they need to learn.)

Sharing economy is a lovely term that helps to provide some insights into the other benefits of these transactions, but also under-emphasizes the financial aspect. People aren’t sharing, they’re leasing.

Collaborative consumption is great, but as with any economy, it’s not just about consumption. True, in the case of manufactured goods, it is about consumption being shared across multiple parties. But in the case of services, consumers are producing. As 3D printing expands, the line of manufacturer will get even more fuzzy.

Marketplace economy is good because it brings out the social nature of these transactions and the platforms necessary to make them happen. But B2B also has marketplaces, so it’s not exclusive of other sectors.

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But something different is happening now, which was really enabled by smartphones. Now that everyone* is walking around with a powerful computer in their pockets, we've expanded the ability to find, confirm and enable an entire economy based on people leasing out their belongings or skills. Airbnb is probably the most famous, but VRBO, Lyft, SitterCity (or UrbanSitter) and TaskRabbit are also creating entirely new revenue opportunities for average people just by leveraging their current assets. (Ok, SitterCity and UrbanSitter are just making an existing trade more efficient, but keep watching how those services evolve.) Note: If anyone from either SitterCity or UrbanSitter are reading this: can you put a gifting function into your service, perhaps making a deal with Wrapp or HotelTonight or Uber so that you can gift people with kids a night out? Oh, and while I'm at it - make the whole thing more dad-friendly, that's who's really going to explode your service. You know how lazy we are, we can't remember who has babysat before.]

Not only are these businesses creating new wealth, they're also doing a great service for the environment. Since environmental protection and wealth creation don't always go hand-in-hand, it's important to note. 

The easiest way to see how these services can have environmental benefit is to look at Zipcar, which estimates that it will reduce carbon emissions by 65 billion tons a year. Now, add in Lyft and Rideshare and Sidecar and . . . well, you get my point. Some of that may be offset by the additional taxi traffic that is enabled by Uber that makes it easier to get a cab and therefore is taking consumers away from public transport. But I really don’t think that’s why people aren’t taking the bus. Besides, Uber is probably at worst carbon neutral in that it makes taxi routes more efficient and reduces random driving around looking for fares. If anyone has this data, I’d love to see it.

The sharing economy mechanisms are also being used to fund local public works projects (such as Spacehive and Neighbor.ly) as well as fund new enterprises. This has the potential to disrupt local governments as well. (Though whether this will devolve into some sort of tax where the projects the public most cares about gets relegated to these funding mechanisms while the governments focus in on their pet projects, remains to be seen.)

Of course, these benefits don’t come without disruption. And while disruption is used as an unalloyed positive adjective in Silicon Valley, the process of change carries pain with it. Technology always moves faster than the law. And while the issues that have arisen so far have pointed to the fact that liability is an extremely un-understood concept in a world in which every person is an entrepreneur of their own assets (physical and service), they have been relatively benign (depending on how you feel about prostitution and property damage) and left to the companies to manage. But when there are reports of sexual assault in a ride-sharing service or smuggling via a task service, there will be a public outcry calling for better regulation.

And, of course, there will always be calls to tax this stuff as well.

As I say, the law will always lag technology. Innovation requires that we stretch what was imagined when the laws were enabled. I’m hugely excited about this economy and what it can enable. I think that this is just the beginning. We are finally starting to see the realization of things that people have been espousing since the emergence of the web.

And even though we had all that warning, we’re still trying to figure out how to handle it.

* I know that smartphones are still not owned by “everyone”, but that just means that more people will be coming into this new economy.

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