August 19, 2016

My summer vacation and the sharing economy

Speaking about the sharing economy is nothing new. However, when you think about it, it has not been around for such a long time even though we may feel that it is indeed the case. But the truth is that the first companies of this kind were born less than a decade ago - do you remember (some are still around) Ecomodo (2007), Crowd Rent or Share Some Sugar (2008)? Neither do I...

In short, technology has disrupted several industries by making them more efficient, in a way not seen before. This video explains in three minutes the fundamentals behind the rise of the sharing economy, being efficiency the key word at stake.  

But in addition to increased efficiency, the sharing economy as untapped multiple regulatory issues. At the end of the day, the regulator runs always behind the market - you cannot regulate something that has never existed before - and the incumbents in the market are not happy when the, in many cases, quasi-monopolies they enjoy are threatened. The legal issues that, even today, global sharing economy leaders such as Uber (drivers employee status, antitrust issues vis-a-vis taxi drivers) and Airbnb (apartment owners crackdown) are facing in key markets such as the U.S. and Europe have been notorious.

In my view, certain trends cannot be stopped, even more so when users love the service. Incumbents, adapt or get ready to die.

Spain has been, and still is today, a particularly tough market for sharing economy companies. However, little by little the latter are finding ways to overcome legal hurdles and to adapt their business models and operate. And for those of us willing to use them they are increasingly becoming irreplaceable.

A good example of how relevant they have become to me has been my latest summer vacation: Car2Go, Uber, Airbnb, Blablacar. I have used them all and they all have had a common denominator: cost savings + convenience + addressing a need. In other words EFFICIENCY:

(1) UBER: I used it to kick off my vacation in style, by getting from work to the train station. I had to make a stop on the way to pick up some stuff and, even with such a stop, I saved 30% over a regular cab (I hate it when cabs charge you an extra just because you are getting to/from a train station).

After multiple regulatory issues and fights with traditional cab drivers, UberX is finally running in Madrid. The service differs slightly from that in the U.S., as drivers need a specific license to operate (therefore, not anyone can be an Uber driver). Brand new cars in great condition, friendly drivers, increasing supply of cars and competitive pricing. Bye bye taxi!

(2) BLABLACAR: for the second phase of my summer vacation I needed to get from a town in the province of Almeria to another town in the province of Cadiz, both in Southern Spain. In the absence of my own car, I had two alternatives - bus and train - each involving a 5h+ trip and approximately €20. I took a Blablacar for €10 and within less than 2 hours I was at my destination. Plus I shared the ride with three very friendly people.

I have recently become a Blablacar user. It essentially saves me time and money on frequent routes (I still sometimes feel like traveling on my own using "traditional" means, though), and I have now realized that it may be a life saver on less common ones.

(3) AIRBNB: finding a nice and affordable place to stay at a popular spot on the second week of August - peak season in Spain - a week in advance may be impossible. You either sacrifice quality or price. Airbnb did it for me: I found a room at a great house next to a golf course and 10 minutes away from the beach at a very low price.

I have been using Airbnb for many years, mainly for leisure trips and renting the whole place for myself. However, over the last six months I have gone a step farther, using it for work travel and renting private rooms within a larger house. So far so good.

(4) CAR2GO: I used it upon my return in Madrid to get home, instead of taking a cab (or Uber). There were cars available nearby at the time and I was not in a rush to get anywhere. A very cheap and enjoyable drive in an empty Madrid to get ready to get back to work.

The new electric car-sharing platform that has been around in Madrid since last November has become a must for me. It is one third cheaper than a cab, it is convenient as you can park anywhere for free, plus you are "in control" as you drive yourself. A perfect subway match to move around the city and to prevent you from the temptation of buying your own car.

Well, it seems like these four guys are gonna stick around for quite some time. I am sure others will be joining soon too.