Sharing startups struck it big and struck out in 2013
The sharing economy is a catch-all term that describes the companies who use technology to let people pool their goods or offer services instead of buying more stuff—everything from cars and apartments to books and music. The age of accumulating all the things is over, and 2013 marked a significant shift toward sharing.
The new collaborative economy has in some cases produced practical apps that improve the lives of urban professionals. Lyft lets average Joes and Janes with expensive car payments recoup some of their costs by giving rides around town; Airbnb does the same but for apartment-dwellers with expensive rents. The sharing model has also given way to truly terrible ideas, like sharing boats and leftover takeout. Lesson (hopefully) learned: We don’t need to share everything.
From legal wins to regulatory crackdowns, sharing economy companies had a monumental year full of triumph and heartbreak. Let’s recap 2013: the year “share” became a business model buzzword rather than a command from your mom.
Ride-sharing regulations: After nearly a year of legal tangling, the state of California in September finally issued rules for ride-sharing and taxi apps, or what regulators call “transportation network companies.” Apps like Uber, Lyft, and SideCar have positioned themselves as technology, not transportation, companies, but California squashed that notion. TNCs are now required to apply for permits from the state’s Public Utilities Commission and conduct criminal background checks on all drivers. The state is also requiring a $1 million minimum insurance policy. But the apps are, sort of surprisingly, all on board, because finally, there’s some guidance on how to operate in this new world. Now they have to wait for other states to decide on their own regulations. Who knows how long that will take?
Uber gets competitive: Uber made its name as a luxury car-hailing service—simply open the app, request a car, and wait for a black SUV to drive you around in style. Uber still offers high-end rides, but the company is now playing to win with fare-splitting, not to mention price-slashing to compete with cabs in places like Chicago, and offering new ways to pay. The transportation app market is brand new but already pretty crowded, and Uber has managed to hold on to the lead despite the competition. Chalk this year up as a successful one for Uber.
Sharing a real resource: 2013 saw plenty of dumb startups plague the app stores, enticing users to share all kinds of useless crap, but a few companies are working on a sharing economy concept that would actually help benefit people: shared Wi-Fi. Companies like Fon are encouraging people to split their Wi-Fi signals and securely share a slice with the public. Cable companies are letting their customers partake in outdoor hotspots. Apps like Hotspotio turn Wi-Fi sharing into a game of sorts. Next year will be Wi-Fi sharing’s time to shine.
Global expansion: While sharing economy companies face regulatory hurdles here at home, they’re also working to build out their international business. Airbnb grew quickly overseas before developing a smarter, slower strategy this year to avoid burnout. Uber rolled out service on new continents this year. Lyft is also pursuing international expansion. These companies are designing a future where you’ll use one app to hail a car or find accommodations in every major city around the world.
Marketing gimmicks we support: Lyft probably didn’t pay Conan O’Brien for this excellent (both excellent and NSFW) product placement, but it put the ride-sharing app in the public eye in the best possible way:
Regulatory purgatory: Humans have been sharing resources for all of recorded history, but the sharing economy has thrown lawmakers for a loop. Companies like Uber and Airbnb are apps that are also partly mired in old-fashioned industries—transportation, hospitality—that are deeply entrenched and slow to change. Uber clashed with D.C. officials this year while critics claim Airbnb is running afoul of New York’s temporary hotel laws—not to mention the tax issues.
Uber controversy: 2013 was pretty good to Uber, but the company is wrapping up the year by making a whole bunch of East Coasters very angry. The on-demand car service regularly institutes surge pricing when demand is high, like a particularly snowy Saturday night in New York. Some riders paid seven times Uber’s normal rate—that’s $175 minimum, even if you're only going a block—and are taking the company to task on Twitter. But Uber isn’t backing down from the policy, claiming that surge pricing ensures that more drivers are on the road.
Terrible, no good, very bad apps: This year saw an abundance of “like this for that” sharing economy startups: like Airbnb for pets, like Zipcar for babysitters, like Uber for helicopters (that last one is real). Most of them are terrible business ideas with even worse names. But, hey, anything for a shot at that sweet venture capital, right?
Lame marketing gimmicks: Sharing economy companies have handily won over early tech adopters, but they have to prove their worth to average folks who don’t live in the Bay Area. So a few enterprising companies regularly do promotions—or what I call gimmicks—to get people to sign up. Want an ice cream truck or a kitten to cuddle? You could order those on-demand during promotions this year. They’re silly but effective at grabbing people’s attention. Uber’s latest, a $135 Christmas tree delivery run in New York , was particularly ridiculous, because you can get a tree in New York for less than $50—and most tree lots offer delivery.
A serious concern: Sometimes it seems sharing apps face such intense scrutiny because they’re up-ending traditional industries, but we forget that consumer protections exist for a reason: to keep people from getting ripped off or hurt. Stories about Lyft drivers who harass their passengers, Uber drivers who get in car accidents, or Airbnb hosts who use the site to run illegal hotel operations might be few and far between, but those outliers could poison the well for everyone.