For more information on Rachel Botsman: http://rachelbotsman.com/

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Kevin: This episode of the Crowd is brought to you by Near Me. Connect buyers and sellers with the all-in-one Near Me platform. Find out more at near-me.com. Thanks.

 

Hi. Welcome to The Crowd, a podcast by Near Me. We’re talking about peer-to-peer marketplaces. We’re talking collaborative economy and we’re talking about thought leadership. We’re talking about all these things, any and all of them with some of the best minds in the field. And of course, I’m your host, Kevin Cohen.

 

Today, we’re going to connect with Rachel Botsman. Rachel is the foremost expert on collaborative consumption. She authored the book What’s Mine is Yours: How Collaborative Consumption is Changing the way We Live. Also her TED talk on collaborative consumption has been viewed over 2 million times. In her latest endeavor, Rachel is currently teaching MBAs at Oxford University about the collaborative economy. Let’s jump in to the interview.

 

I’m super excited about today’s interview. Today, I’ll be joined by Rachel Botsman. Rachel is the co-author of What’s Mine is Yours: The Rise of Collaborative Consumption. Rachel writes, speaks and consults on collaboration and sharing through technologies. She is the Founder of collaborative consumption.com and has been a speaker on many TEDx stages. Rachel, welcome to the show.

 

Rachel: Thank you.

 

Kevin: Before we jump in to our discussion on the collaborative economy, I’ve got some rapid fire questions for you. What book do you recommend most often?

 

Rachel: The book I recommend most often is, well, there are two actually. I’m going to cheat. Steven Johnson’s Where Good Ideas Come From and Clay Shirky, both his books, Cognitive Surplus and Here Comes Everybody.

 

Kevin: Very good. What peer-to-peer marketplaces or services do you use on a personal basis?

 

Rachel: It changes but consistently, I find myself using ride sharing apps such as Lyft and Uber. I was using car sharing platforms in Australia but then I had kids and I had to sort of give that up and buy my own car. But when I travel, I also use Zipcar instead of rental services. We’re finding peer-to-peer financial platforms are playing a bigger role in my life. So before, I tended to be more of a backer but now I’m starting to use peer-to-peer currency transfers, peer-to-peer lending platforms. Different behaviors around goods whether that’s swapping goods or rental goods. Airbnb is an integral part of my life. Again, both on the host side. I have to travel often for work. So we rent out our home. And it’s usually the platform that we use as a guest as well.

 

Kevin: Very nice. What are some of your favorite things to do when you’re not working?

 

Rachel: Well, I don’t really see it as sort of life and work. But when I’m not writing or speaking or immersed in the space, I love to hang out with my kids. I’m really passionate about exercise. So I’m lucky that we live near the beach. Swimming, walking and I am an avid reader. So I usually have my head in some kind of book and I also love to cook.

 

Kevin: Nice. So before we jump in to the world of collaborative consumption, give us your back story. What did you do before 2010 when you coined that famous term?

 

Rachel: It’s a little bit of a smorgasbord. I went to university and I studied Fine Art and I passionately believed that I wanted to become an artist. I was doing a lot of installation sculpture. But then what I realized through that journey and being at Oxford was that what I enjoyed was making very complex things in the world simple. And at that stage in my life, I was doing it through my art and my art was what was connecting with people. I then went to live in Ireland for a year then decided I hadn’t finished my education and went to Graduate School at Harvard. And then to be honest, I was a little bit lost. I became a management consultant specializing in brand and customer experience and design and I spent about six years doing that. I don’t regret it. I traveled the world. I learned a lot about a wide range of businesses and how businesses work. But I just sort of looked ahead and thought this isn’t my life.

 

I then joined President Clinton’s foundation in the early days. At that time, it was very small. We were looking at a different approach to philanthropy, a different lens on solving social problems could achieve big change in the world. And it was a very pivotal period in my life in terms of if you apply a different lens to something, you can come up with different solutions. It was rough when I was there. I started getting almost obsessed about the future of marketplaces. I just felt that social media was just the beginning that we were sharing music, videos and daily thoughts. But where will this behavior go next? So I really became obsessed with understanding sort of the efficiencies that technology can create and the big market dynamics around that. But what interested me more was sort of this new web of trust that was just starting to emerge.

 

Jumping ahead about a year, this was many, many Post Its all over my bedroom wall, I had then joined a sustainability incubator and met them, I call them the Rue.  And I said to him I really believe that this is a big idea. And he said well, why don’t we decide to write a book on this? So I said that sounds like a great idea. And the intention was always to try to write something that would really codify many different threads of ideas that would tie together and give people a language as to how things – at that time, it was things like eBay and Airbnb and Zipcar and Craigslist, these were you know, RelayRides which were really in their infancy how they were all connected. So we wrote the book in 2009, at the beginning of 2009 and then decided that was just the beginning of the journey and really said this is what I want to help spread. And that was really the going of the early years. I was doing whatever I could whether it was in the media or writing or speaking to help raise awareness.

 

Since then, it’s been going on a lot deeper on sort of the implications and consequences around this space. So whether that’s the future of work, trust and reputation systems, identity, looking at new forms of financing and venture capital that help these distribution networks actually have distributing forms of wealth. And who knows where we go next?

 

Kevin: Definitely, definitely. So in 2012, you talked about how the currency of the collaborative economy is trust and certainly it’s a big part of it. Some of your peers in the space have said that community is now emerging to be more important than trust. Obviously, they’re kind of interlaced. What are your thoughts on that?

 

Rachel: I think it’s a false dichotomy. Honestly, I think trust and community are sisters. I mean, not even sisters, they’re interlink. Community definitely is sort of the higher order. It’s not even a secret source. It’s the DNA. If you don’t have community, it’s just a marketplace for assets and a marketplace for assets is something that is very easy to replicate. Community is the behaviors. It’s the culture. It’s the engagement. It’s what keeps people coming back. It’s what makes people loyal to your platform. But in order to have community, people have to trust the idea. They have to trust the company or the platform facilitating the transaction and they have to trust one another. So without the trust ingredient, without getting those pieces right, it’s very difficult to create a community.

 

Kevin: It makes sense. That makes sense. In 2014, we saw the collaborative economy reach unparalleled heights. There was over $7 billion in funding maybe even more. What are some of the current trends that you’re following right now?

 

Rachel: There are a few things about it hitting this accelerated period of rapid growth and I think what’s really significant is you now have sort of $3 multi-billion platforms in the space, Airbnb, Uber and Lending Club. And they’re from three very different sectors. So I think the first thing people are saying is this isn’t a niche trend, this isn’t a reaction to the recession. This is a transformation in the way we think about business models and the way we think about the relationship between people and company. So this line between consumer and producer is getting increasingly blurry. And the result of that is that big brands are no longer thinking of this is marketing or sponsorship opportunity. They’re actually looking at this as an opportunity for transformation themselves.

 

The second big thing I would say is confusion so terminology confusion and definition confusion. I’m seeing that anything could create this inter-mediation so anything that matches a supply with a customer in a way that changes the dynamics of supply and demand is being thrown under this banner. The problem with that is that pressing a button on my phone and getting beer delivered or flowers or my washing is a very different dynamic to platforms by Kickstarter and Etsy and Relay Rides and BlaBlaCar and Airbnb that are truly built on sharing and collaboration. So it’s sort of this on-demand instant gratification space is crowding I think some of the key principles and values around the collaborative economy.

 

The third thing, I would say the third major theme or topic of discussion that might have a major social economic implication is that people are just starting to see and understand. So the implication is around the future work. Are the providers on these platforms, are they contractors or are they employees? How do we – is this value creation? Or is this value destruction? Governments, how do they start thinking about regulations when suddenly individuals can make money in the same way a company could? So I think what’s happening is that it’s main stage enough that these big issues around society and the economy are starting to emerge. And sort of all the positive media and this is a great thing and how exciting, it’s now naturally being overtaken by these more serious debates.

 

Kevin: Definitely, definitely. So there are a lot of large entrenched brands that are kind of watching on the sidelines right now. How should they get involved in the collaborative economy? What are some strategies they can use and employ in dipping their toes into this?

 

Rachel: Well, I think there are two ways that I think about it. The first is really not saying this as slaying the culprit giants. This isn’t a case of destruction. What you see these platforms doing is essentially creating new forms of customer value that are appealing to people. So I think it’s about really understanding what is in the DNA of that customer value and how do they match or be that. And to do that, I think they really have to start to understand. Okay. So how is value created? It needs platforms. How is value scaled? And how is value consumed in a way that’s different from traditional business? So if you think about that, in Airbnb, value is created because they take the capacity of spare spaces whether those are rooms, holiday homes, tree houses or castles. They can scale that incredibly fast because they don’t own that inventory. They facilitate access. It’s consumed differently with experiences. It’s people directly trusting one another. So it’s really understanding those value questions within their particular space though I think that leads to innovation opportunities.

 

The second thing that I always say to companies is yes, often the opportunity exists around some kind of underutilized asset or thinking about how an asset can be deployed differently. But if you look at successful companies in that space, they’re still very much needs-let. They still understand what is the problem that they’re solving for customers? And typically what I’ve seen is that people are solving problems around complexity so experiences that are unnecessarily complex or frustrating for people, redundancies so when it feels like there are redundant people or processes that you can actually bypass, waste so when there’s wasted value in a system, access so when goods or services are out of reach to many people or when you actually only need shared access, and broken trust so when trust in a system is broken like banking or health care. People are open to other alternatives.

 

Kevin: Right. I also think an additional element is just a more humanized experience. I mean, I think that when I reflect on jumping into a Lyft or staying in some one's home with Airbnb is that one-to-one connection that is so absent from the typical transactions in the incumbents that really people are craving.

 

Rachel: Yeah. But the thing is I don’t think – I think in some examples they would definitely describe it as human-ness. I think in other examples is that there is a very different relationship between, let’s even not call them consumers, the person sort of buying the goods and services and the so-called company. And what that relationship looks like, some people would describe it as more personalized. Some people would describe it as more immediate. Some people would describe it as more transparent. In some instances, it feels more human. But it’s really understanding how that dynamic changes and what that looks like. It’s hard for big brands because it’s largely transactional.

 

Kevin: What is the role of government and regulation in this emerging economy?

 

Rachel: So I mean, this has been the other big shift. I think when many of these ideas – it’s kind of gone through three very quick ways. It’s so small that it’s off the radar and not worth worrying about. Holy crap, what do we do with this because it’s totally outpaced the law and regulation doesn’t exist that works in this space. I mean, it’s creating sort of new categories of work, new categories of workers, new types of businesses. So very quickly, this is growing very fast. This is going to become a mainstream aspect to society. Perhaps, this is the future of business. Perhaps, most systems will be decentralized networks and marketplaces. What is the right kind of regulation? And what is the role of regulation? And I think that’s a huge leap from any government around the world. It’s not saying how to protect old regulation and apply it to this. But even, what is the role of government regulation in this peer-to-peer environment?

 

Kevin: Okay, okay. Well, there are a lot of critics out there that say that collaborative economy or what they would like to call the sharing economy is unfair to employees. What’s your take on this? And they’re not even technically employees so we have to be careful with terms like that so–

 

Rachel: I think the first – it’s a problem that the terms are used interchangeably like collaborative and sharing economy. I think this is really important but I understand why not even the critics, I do, I feel the same way. You can apply the term sharing economy to systems that are based on sharing. So the sharing economy is really about systems where people are sharing assets or services hopefully all for free directly from individuals. I don’t think Uber is the sharing economy. The collaborative economy I think refers to this broader shift of these decentralized networks and marketplaces that deploy assets in a different way because they match people with needs with people who have some ways that  have process of institutions. So I think the term sharing economy has attracted negative attention because it stands for an ideology that maybe isn’t representative of the space and it’s not indicative of the way assets are actually being rented and the behavior that’s going on.

 

Back to your question about work and providers. This is the topic I’ve spent the last six months researching. I’m going to Oxford in a few weeks. And I’m one of the researchers dedicated to looking at this, the future of work, how to protect the top providers. Do we need to make sure this work is rewarding in order to work ? Absolutely. Do we need to figure out how these people are protected, how when you transfer risk from a company to an individual they have proper insurance? Do we need to look at the bigger picture of benefits? These are all big questions. The problem is that drivers, the key drivers on Uber have clouded the issue. And I would also say some of these are sort of errand networks as well.

 

So when you look at the criticisms that talk generally about the space, they’re generally fired at the way drivers are treated on Uber and how we’re becoming a race to the bottom. See, when you look at the criticisms, they really come from three places. The first I totally agree with is, how do you make sure this is about power and not exploitation and that people are just being treated as independent contractors and not as employees because it’s a good business model for the company? The second thing I totally agree with that these providers are the ones creating value for the company yet it’s still the not one percent are getting extremely wealthy. So distributing networking do not lead to distributing wealth.

 

The third and the fourth points that are commonly raised, I do not entirely agree with. And what they say, you often hear is that this is an – people are badly treated or this isn’t good for people. They’re doing it because they don’t have a choice. And that is a very limited way of looking at it because first, we have to look at the diversity of people who are actually participating in these platforms. It’s not just unemployed or underemployed people. It’s often students, stay-at-home moms, retirees or even people in full-time traditional jobs who are looking for something else outside of their nine-to-five environment.

 

The second thing is you have to go back to whether it’s lending money or lending car, whether it’s selling goods on Etsy, whether it’s renting out your car on Relay Rides, whether it’s renting out your home on Airbnb. It’s hard to dispute that those things are bad for people. What’s clouding this is drivers on Uber and certain labor marketplaces where it’s a race to the bottom. So I think it’s a case of a couple of examples have clouded the much bigger opportunity.

 

Kevin: Right, right. Very true. And I think that when I get in to a car with even Lyft drivers, I had a gentleman who told me that he was using the extra income to visit his granddaughters. And he was more than happy to have that income to do that. So there are a lot of people that actually get a lot of benefit out of these types of subcontractor work or independent contractor work.

 

Rachel: I couldn’t agree with you more, I mean, yes, many of the macro issues being raised by journalists are important to address. But if you want to go find a story of a person who feels like how this space is abusing them or they’re doing it because they don’t have any – you’ll find that person. But you can find 99 other people who to a point they’ll tell you the story of how this has changed their life in a small or a massive way.

 

Kevin: Right.

 

Rachel: And Lyft drivers, they – I think the average driver drives 14 hours a week. This isn’t a full time job necessarily for them. This is giving them a pathway to do things that they otherwise wouldn’t be able to do whether that’s paying off bills, visiting their grandchildren, having some kind of work in between looking after kids. There’s a flexibility here that offers people a type of work that they just can’t find with the traditional nine-to-five job.

 

Kevin: Right, right. So I understand that you’re writing curriculum for a new course coming out. Tell us about that.

 

Rachel: Yeah. So I’m always looking at ways that you can push the space forward in a way that can have impact way beyond sort of my individual self. And one of the things that I realized was I was looking at MBA curriculum's and no one was really teaching this subject. So I was talking to Oxford University to the Said School of Business and said, you know, what do you think about designing the first course just dedicated to this subject? And they said, you know, this is what the questions are asking about. No offense. But they’re not asking about GM or GE and they definitely don’t want to hear about Kodak and Blockbusters again. What they want to understand is, you know, why is Uber so disruptive? Should a company that has questionable values be estimated at $40.2 billion? Will Airbnb take over hotels? What does the future of finance look like? What will happen off the bitcoin?

 

These are the questions they were getting asked and didn’t have the curriculum to address. So I designed this course and I will teach it in a couple of weeks. It runs over nine weeks. It’s highly experiential. A lot of the entrepreneurs from the space will come along and participate. And in conjunction with it, we decided – and this will launch in a couple of weeks. We’re going to launch a collaborative economy library sort of taking heat of my own learning's, advices. What’s the problem that you’re trying to solve? I found it very hard to search and identify credible research across different categories. So there’s a lot of research being done but even though I had to search and then you find that study and you’re like, are these facts reliable? What’s the source really behind this? So we built this library and it will organize the best studies out there.

 

So if you’re interested in peer-to-peer learning, you can find the best study in ride sharing and so forth. So it’s not just for academics. It’s for entrepreneurs who need to make sure they connect the pictures. It’s for media journalists who are misquoting facts and actually need reliable facts. It’s for the media, for a whole host of people who are just trying to push the best research out there.

 

Kevin: Great. So is that library launched? Or is it going to be launched later this year?

 

Rachel: It will be launched end of April. So April 24th, we go live and it will sit on the collaborativeeconomy.com URL.

 

Kevin: Wonderful. Well, make sure that we get that information so that we can link to it and provide it to our subscribers of this podcast.

 

Rachel: Yeah, absolutely. That would be great.

 

Kevin: That is really great. So Rachel, if our readers want to learn more about you and what you’re doing at Collaborative Consumption, where can they find out more?

 

Rachel: My website, posts, a lot of my articles and thinking, it’s just rachelbotsman.com.

 

Kevin: Wonderful. And your sister site which is your organization is collaborativeconsumption.com, correct?

 

Rachel: collaborativeconsumption.com is a network of over 36 people around the world who report on a type of local news as to what’s happening from the Netherlands to Israel to Australia in the space. So one of the things we feel is really important is you hear a lot about what’s going on in San Francisco, New York, London. But some of the most interesting examples are emerging from places like the Netherlands, places like Estonia. Brazil, there’s a lot of activity. And that’s what we set up the site to do.

 

Kevin: Wonderful. So it’s a global, almost like a global site with curated content from around the globe.

 

Rachel: Yeah. It’s really – the curators and local communities, they decide what to post out there.

 

Kevin: Rachel, thank you so much for your time. Everybody, please check out the show notes where you’ll find all the links to Rachel’s information. And Rachel, we wish you the best of luck with your course and all of your other projects that you have going.

 

Rachel: Thanks so much, Kevin. Thank you.

 

Kevin: So that’s it for today’s show everybody. I’d like to thank Rachel Botsman for joining us here today. She’s doing awesome stuff so check her out. If you want to learn more about Rachel, we’ve got all of her information in the show notes. Go to www.near-me.com. Click on the blog and then go to the podcast listing. Also, if you like today’s show, we’d really appreciate it if you could go to iTunes and leave us a five-star review. Make it a great day and thank you.