Examples of businesses operating in the sharing economy are Etsy, Airbnb, Uber, and eBay. These businesses enable individuals to buy and sell to other individuals, as opposed to a corporation selling its product to the masses (like Procter and Gamble selling boxes of laundry detergent to customers).
Although recently enabled by technological advancements in mobile communications and social media, the notion of a sharing economy is not new. Farmers markets, bartering, and trading are all forms of commerce that exemplify a sharing economy. And inherent and vital to this sharing economy are reputation and word of mouth communication.
Commerce is once again trending towards becoming more and more organic. With an increased spotlight on the social nature of commerce, companies that enable or push these capabilities forward, need to be fully aware of some of the guiding principles that are critical within a sharing economy: Transparency, Trust, and Reputation.
From Thomas Friedman’s interview on nytimes.com with Brian Chesky, co-founder of Airbnb.com, Chesky states: “The 21st-century economy will be powered by people so I will be able to sell something directly to you and delight you and surprise you, and the selection you’ll be able to choose from won’t be 4 but 4,000,000.”
Never mind the paradox of choice dilemma we will be presented with when the inevitable happens. The bottom line is that we are going to be dealing directly with others just like ourselves for the procurement of goods and services. And therefore, I want some kind of assurance and expectation of a positive experience. This is where trust and reputation become paramount – you don’t want a tarnished image.
Josh Constine, a TechCrunch contributor, recently coined the term “JerkTech” to refer to a company or business that puts its own interests first and tries to monetize free or public assets, making it more onerous for everyone else in the sharing economy to participate. The two prime examples of this were with parking spot reseller startup MonkeyParking and restaurant reservation arbitrage disrupter ReservationHop.
With MonkeyParking, individuals could bid on a freely available parking spot, currently being held by someone occupying the space (a MonkeyParker) with the payment going to the MonkeyParker and upon vacating the space, the parking spot going to the highest bidder. Naturally, a commission would go to the app/platform provider MonkeyParking.
With ReservationHop, a similar model was in play with reservations being made and held under false names and then having the reservation released to the successful “purchaser” of the reservation. The monies involved in this transaction would be completely outside the realm of the restaurant. (There have been several articles and posts written about these two fine examples of JerkTech, which I will provide at the end for further reading.)
JerkTech can be a two-way street. A prime example of how the consumer element negatively impacts the sharing economy lies with this account of apparent decline of customer service at a New York restaurant. In the account, the restaurant found over the past decade of business that its service times and reviews gradually declined. Ultimately, this was due to patrons’ cumulative and gradual disengagement from the restaurant and service personnel, as well as increased engagement on their mobile devices in attempts to digitally footprint their restaurant experience in the sharing economy. This transition in engagement resulted in a more drawn out and impersonal restaurant experience.
The takeaway is to have a conscience when thinking about disruptive tech or participation in the sharing economy. The more we involve the organic dynamics of a sharing or meshed economy, and the more we involve word of mouth dynamics, the more we need to be aware of how we as individuals and other players can positively contribute and benefit the ecosystem.
For more reading on the term JerkTech and the two companies mentioned above:
Stop The JerkTech, TechCrunch
‘JerkTech’: Is it free-market, or theft?, WND
Cash In on the Sharing Economy, Kiplinger
Not “JerkTech” — Just Business as Usual, Built In Chicago
The Antisocial Networks, The Economist
Product Manager, Social Technologies