When the world gets closer.

We help you see farther.

Sign up to our expressly international daily newsletter.

Future

An IKEA Acquisition Shows Limits Of The Sharing Economy

Do-it-herself
Do-it-herself
Elaine Ou*

SAN FRANCISCO — I can't help but feel disappointed that TaskRabbit, the San Francisco-based startup and "sharing economy" pioneer, has agreed to become a unit of Ikea. Although the company has tried to cast the deal as an expansion opportunity, this outcome is a far cry from the lofty expectations of its early days.

TaskRabbit's fate illustrates Silicon Valley's unbounded idealism when it comes to optimizing everything. The company was a catalyst for "collaborative consumption," a movement in which everyone would share their homes, their vehicles and their time. In a seminal TED talk, Rachel Botsman declared that the currency of the new economy was trust, not money. PwC predicted that TaskRabbit and its sharing economy peers would comprise a $335 billion market by 2025.

Unlike traditional commerce, which was cold and profit-driven, collaborative consumption revolved around relationships and reputation. Lyft was "Your Friend With a Car," not a money-grubbing corporation. TaskRabbit offered "service networking" — like social networking, but with labor. Other ventures formed around sharing home-cooked meals, storage space, power tools and camera equipment. Airbnb founder Joe Gebbia predicted that society would eventually abandon private ownership in favor of community-based sharing.

All the activity fell into a regulatory gray area. Early on, Lyft and other ride-sharing services didn't explicitly sell anything: They just took a percentage of the fares "donated" by customers. The companies involved organized an advocacy group called Peers, which campaigned to keep the sharing economy free of regulation — which, of course, was meant to rein in greedy capitalists seeking to exploit information asymmetries, not people who chose to share their resources with trusted peers. (Disclosure: I was the community organizer for the Silicon Valley chapter of Peers.)

When the subsidies went away, the platforms began to struggle.

I had a car and some spare time, so I signed up as a TaskRabbit. Heck, I became a Lyft driver and an Airbnb host as well. Any underutilization of resources was wasteful, I reasoned. Yet somehow my career as a service provider never felt as empowering as advertised. Prospective customers were more price-sensitive than one might expect from a community of peers. They treated my car and apartment worse than I would expect from a trusted friend.

For all the sharing economy's alleged virtues, participants primarily came for the cheap services. The companies had a cost advantage because they faced little or no regulatory burden, and because their investors were willing to subsidize low prices in an effort to build new markets. As soon as the subsidies went away, the platforms began to struggle.

Silicon Valley is obsessed with the idea that technology can iron out the inefficiencies of any system. The underutilization of our time and resources presents a tempting opportunity, but utopians often overlook the transaction costs associated with real-world commerce. As it turns out, burdens such as licensing, insurance and regulation go a long way toward facilitating transactions between strangers. If you take this into account, the outsourcing of one-off errands looks far less efficient.

The gig economy could even be considered dystopian, in the way it takes advantage of differences in the value of people's time. To some extent, it can provide cover for failing to pay a living wage. TaskRabbit likes to advertise its platform as a source of furniture assemblers, but another popular task is hiring people to stand in line at the Department of Motor Vehicles. Nothing underscores wealth inequality like paying someone to hold your place in line.

In Silicon Valley, bad business models never die — they temporarily disappear and later resurface with new buzzwords. Just as the sharing economy is fading, collaborative consumption has begun to reemerge on the blockchain. This time, underutilized resources like energy, disk space, and apartments will be tokenized and traded. If that doesn't work, maybe quantum artificial intelligence will be next.


*Ou is a blockchain engineer at Global Financial Access, a financial technology company in San Francisco. Previously she was a lecturer in the electrical and information engineering department at the University of Sydney.

You've reached your limit of free articles.

To read the full story, start your free trial today.

Get unlimited access. Cancel anytime.

Exclusive coverage from the world's top sources, in English for the first time.

Insights from the widest range of perspectives, languages and countries.

Future

Hey ChatGPT, Are You A Google Killer? That's The Wrong Prompt People

Reports that the new AI natural-language chatbot is a threat to Google's search business fails to see that the two machines serve very different functions.

Photo of bubbles exploding

Mind blowing power

DeepMind
Tristan Greene

Since OpenAI unveiled ChatGPT to the world last November, people have wasted little time finding imaginative uses for the eerily human-like chatbot. They have used it to generate code, create Dungeons & Dragons adventures and converse on a seemingly infinite array of topics.

Now some in Silicon Valley are speculating that the masses might come to adopt the ChatGPT-style bots as an alternative to traditional internet searches.

Microsoft, which made an early $1 billion investment in OpenAI, plans to release an implementation of its Bing search engine that incorporates ChatGPT before the end of March. According to a recent article in The New York Times, Google has declared “code red” over fears ChatGPT could pose a significant threat to its $149-billion-dollar-a-year search business.

Could ChatGPT really be on the verge of disrupting the global search engine industry?

Keep reading...Show less

You've reached your limit of free articles.

To read the full story, start your free trial today.

Get unlimited access. Cancel anytime.

Exclusive coverage from the world's top sources, in English for the first time.

Insights from the widest range of perspectives, languages and countries.

The latest