Podcast
Questions and Answers
The sharing economy has created a new generation of 'citizen suppliers' who provide access to their assets to others for short-term use.
The sharing economy has created a new generation of 'citizen suppliers' who provide access to their assets to others for short-term use.
True
What is a key concept used to describe how effectively a product fulfills market demand?
What is a key concept used to describe how effectively a product fulfills market demand?
Product-market fit
What are some examples of goods that are being shared in the collaborative consumption economy? (Select all that apply)
What are some examples of goods that are being shared in the collaborative consumption economy? (Select all that apply)
What is one of the defining features of the sharing economy that helps foster trust and reduce risk for both buyers and sellers?
What is one of the defining features of the sharing economy that helps foster trust and reduce risk for both buyers and sellers?
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Uber and Lyft have faced criticism for their methods of hiring and worker classification.
Uber and Lyft have faced criticism for their methods of hiring and worker classification.
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What is the name of Uber's software system that provides real-time data on driver locations, customer locations, and demand levels?
What is the name of Uber's software system that provides real-time data on driver locations, customer locations, and demand levels?
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What is one of the main concerns that has slowed the expansion of the sharing economy?
What is one of the main concerns that has slowed the expansion of the sharing economy?
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Uber has been criticized for its approach to driver safety and its response to incidents of misconduct.
Uber has been criticized for its approach to driver safety and its response to incidents of misconduct.
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What is one of the key advantages of the sharing economy that is difficult to replicate by traditional businesses?
What is one of the key advantages of the sharing economy that is difficult to replicate by traditional businesses?
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Uber has maintained a consistent record of profitability throughout its history.
Uber has maintained a consistent record of profitability throughout its history.
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What are two examples of companies that Uber has partnered with or invested in?
What are two examples of companies that Uber has partnered with or invested in?
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The sharing economy has completely displaced traditional markets in areas like transportation and hospitality.
The sharing economy has completely displaced traditional markets in areas like transportation and hospitality.
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What is one of the key concerns associated with the rise of the sharing economy?
What is one of the key concerns associated with the rise of the sharing economy?
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Airbnb has focused solely on providing a platform for sharing private residences, excluding hotels and hostels.
Airbnb has focused solely on providing a platform for sharing private residences, excluding hotels and hostels.
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What is the name of the company that provides a platform for sharing office space?
What is the name of the company that provides a platform for sharing office space?
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Airbnb has been successful in entirely eliminating the threat of competition from traditional hospitality businesses.
Airbnb has been successful in entirely eliminating the threat of competition from traditional hospitality businesses.
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Name two examples of travel sites that have incorporated Airbnb-like services into their offerings.
Name two examples of travel sites that have incorporated Airbnb-like services into their offerings.
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The use of social media has been a significant factor in the growth of the sharing economy.
The use of social media has been a significant factor in the growth of the sharing economy.
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What are some of the potential challenges that the sharing economy faces in terms of trust and safety?
What are some of the potential challenges that the sharing economy faces in terms of trust and safety?
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The sharing economy has completely resolved all the challenges related to regulation and insurance.
The sharing economy has completely resolved all the challenges related to regulation and insurance.
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What is a key strategy that companies like Uber are using to expand their reach and influence in the digital world?
What is a key strategy that companies like Uber are using to expand their reach and influence in the digital world?
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The sharing economy has exclusively benefited consumers, without having any impact on traditional markets.
The sharing economy has exclusively benefited consumers, without having any impact on traditional markets.
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In addition to the traditional sharing economy, what other potential areas are companies like Uber moving into?
In addition to the traditional sharing economy, what other potential areas are companies like Uber moving into?
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All companies in the sharing economy have experienced significant growth and have been successful in their endeavors.
All companies in the sharing economy have experienced significant growth and have been successful in their endeavors.
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Why is the sharing economy often seen as a more environmentally friendly choice?
Why is the sharing economy often seen as a more environmentally friendly choice?
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Study Notes
The Sharing Economy
- The sharing economy involves firms categorized as part of the sharing economy or participating in collaborative consumption.
- Businesses in this sector focus on market size, impact, investment, and business valuation.
Introduction
- Technology enables diverse product and service providers to connect with consumers more efficiently than traditional markets.
- This allows for a generation of citizen suppliers.
- Product owners (e.g., Airbnb for rooms, Turo for cars, Boatsetters for boats) provide rental services.
- A new class of micro-entrepreneurs offer personal services (e.g., Uber/Lyft for car rides, Rover for pet sitting, Feastly for meal prep, Care.com/Angie's List/Handy for home services).
- Some firms buy inventory and rent it out (e.g., Rent the Runway with dresses, Zipcar with autos, Chegg with textbooks).
- These products are considered "collaboratively consumed" where individuals take possession of an item for a set time and then return it to others.
Introduction (Continued)
- Consumers collaborate in financing projects by pooling capital (Kickstarter, GoFundMe, LendingClub, Kiva).
- Existing market makers like eBay and Craigslist formed the basis for internet-enabled market places.
Examples of Sharing Economy Firms
- Goods: Pre-owned items (eBay, Craigslist, ThredUp), loaner products (Zilok, Rent the Runway, Chegg), and custom products (Etsy, CustomMade).
- Services: Professional services (Upwork, crowdSPRING), personal services (Angie's List, Handy, TaskRabbit), and delivery services (DoorDash, Grubhub, Instacart, Postmates, Drizly).
Examples of Sharing Economy Firms (Continued)
- Transportation: Ride-sharing services (Uber, Lyft, Didi), loaner vehicles (Turo, Zipcar).
- Places to Stay: Office space (LiquidSpace, ShareDesk), lodging (Airbnb, HomeAway, Couchsurfing).
- Money & Finance: Money lending (LendingClub, Kiva, Prosper), and crowdfunding (Kickstarter, GoFundMe, Indiegogo).
Section 11.2: Learning Objectives
- Identify factors contributing to the sharing economy's rise.
- Understand competitive factors that influence success in collaborative consumption marketplaces.
Factors Fueling Collaborative Consumption
- Prolonged global economic recessions caused many sharing economy firms to emerge.
- Stagnant wages made low-cost alternatives appealing.
- Created a new class of independent service providers.
- Environmental benefits of reuse and decreased consumption.
Winning in Electronic Markets
- Early players gain scale, brand reputation, and financial resources.
- Technology allows for peer-to-peer supply without inventory (e.g., Airbnb, Uber).
- Some services manage inventory to control quality (e.g., Rent the Runway).
- Marketplaces extend value chains by connecting suppliers and customers (e.g., search, scheduling, payment, reputation management).
Social Media and Trust
- Word-of-mouth on social media increases the rate of growth of the sharing economy.
- 47% of sharing economy participants learn about services through word-of-mouth.
- Uber's success is partly due to its viral nature, attracting new users through existing customers.
- Positive social reinforcement drives recommendations to friends and colleagues.
- Concerns about trust and safety (e.g., audit trails, ratings).
Safety and Regulation Challenges
- Establishing trust doesn't eliminate safety concerns.
- Sharing economy participation poses questions for insurers (e.g., responsibility in incidents, coverage for suppliers).
- Some firms offer additional coverage and guarantees.
- Some governments are exploring insurance regulations.
- Some local firms benefit from taxes and regulatory fees.
- Opposition efforts can create powerful lobbying groups.
Safety (Continued)
- Uncertainty regarding classifying workers as independent contractors.
- If improperly classified, employees may not receive essential workplace protections such as minimum wage, overtime pay, unemployment, and worker's compensation insurance.
- The issue has engaged many state and federal agencies, presidential candidates, and potentially results in class-action lawsuits.
WePay
- WePay offers simple payment solutions to address buyer/seller platform challenges.
- WePay uses fraud-fighting technology, analyzes social profiles to streamline processes, and utilizes transaction history for risk assessment.
- WePay uses machine learning to continually update fraud models.
- WePay's payment capabilities are easily embedded via pregenerated code.
Section 11.3: Learning Objectives
- Identify how large firms invest in, partner with, and develop their own collaborative consumption efforts.
- Gain insights into the advantages of collaborative consumption for traditional industry players, and improve brainstorming skills to identify opportunities for other firms.
Future Outlook
- Examples of major companies that have invested in sharing economy firms (i.e., Alphabet and Uber, Amazon, Apple & Didi, VW, and General Motors).
- Partnerships and acquisitions (e.g., IBM and Deliv, Avis and Zipcar).
Section 11.4: Learning Objectives
- Understanding the development and growth of Airbnb as a multibillion-dollar sharing economy firm.
- Identifying the appeal of Airbnb for both suppliers and customers.
- Understanding competitive advantages and challenges as the company continues to grow.
- Understanding how technology can foster trust in a sensitive marketplace.
Airbnb
- Multibillion-dollar hospitality empire through over 200 million guests around the world.
- Wide variety of listings.
Trust
- Trust is essential for the success of a sharing economy.
- Airbnb verifies identities to eliminate anonymity.
- Offers a $1 million guarantee to hosts, secure payment options, and 24/7 support.
- Airbnb monitors transactions and communication.
Airbnb Challenges
- Breaking local zoning laws.
- Lack of health and safety measures that meet standards of other hotels.
Competition Challenges
- Competition from established hotel companies (e.g., Marriott, Accor, Hyatt).
- Major travel sites including Booking.com and TripAdvisor now include competitors in search options.
Section 11.5: Learning Objectives
- Recognizing Uber's appeal.
- Observing Uber's use of technology to improve service efficiency and reduce costs.
- Assessing the influence of executive decisions and corporate culture on the company.
- Recognizing how technology fosters competitive advantages.
Uber
- Raised more than 21billionandhasavaluationofover21 billion and has a valuation of over 21billionandhasavaluationofover70 billion.
- Created over 50,000 new jobs per month, mostly for drivers.
- Offering greater flexibility and better pay than traditional taxi drivers.
Uber Services
- Trust and convenience through smartphone apps, setting up destinations, and handling payments.
Product-Market Fit
- Key concept in entrepreneurship and new product development.
- Degree to which a product satisfies market demand, and the effort of scaling into a profitable and successful business.
Uber Business Model
- Lean cost structure, drivers own cars, leveraging customer feedback for continuous performance assessment.
- Challenges due to price fluctuations (surge pricing).
Uber Challenges
- Significant problems accumulated: driver strikes, protests by the taxi industry, increased political opposition, theft accusations, and unethical practices.
- Several instances of negative publicity (e.g., hostile culture towards women, minorities, hacks exposing private data).
- It remains unclear the damage caused by these issues.
Uber's Technological Approach
- Utilizes technology to enhance safety and security (e.g., real-time driver monitoring, identity verification).
- Employs mathematicians with advanced degrees to develop algorithms that optimize services.
- Deploys a "God View" to ensure data accuracy
- Investing in new technology (biometrics, voice recognition, panic buttons).
APIs and Uber's Reach
- Uber platforms use APIs (Application Programming Interfaces) for integration into other apps and platforms (e.g., OpenTable, United Airlines, TripAdvisor, and Hyatt Hotels).
- Helps solidify Uber's position in the digital age.
Uber Future and Challenges
- Difficulty maintaining quality service and expanding into markets where competitors already exist.
Further Uber Concerns
- Network effects in Uber's favor: more riders attract more drivers.
- However, Uber has experienced growth concerns—rival Lyft has surpassed Uber in terms of revenue and active riders.
- Significant investments have been poor decisions (e.g., auto leasing programs).
- Hiring issues and job cuts.
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