Critical guide to creating insanely successful sharing economy

Ever since airbnb became such a hit, there have been countless startups trying to engineer the “airbnb-like” success in areas other than travel/lodging business, as the “complete list of airbnb like startups in sharing economy” shows.

Some are greeted with success, others not so much. Let’s take a quick deep dive to discover the most critical elements leading to the success, and how we can purposefully look for and design such success.

1st of all, Identify things that people are already doing with some degree of wasted resource
This is the single most important element in our effort of creating successful sharing economy. This must be well thought out before we even attempt to build anything. Finding this “sweet spot” is half of the success. For airbnb’s host: it’s simply “having a place to live”. People already either own or rent a place, and most of the time, our places are not occupied fully, creating some degree of wasted space. For traveler: it’s the hotel lodging, we are already traveling and lodging, but hotel can get expensive, leading to waste of monetary resource for traveler, to say the least.

A recent techcrunch Interview with Zimride cofounder John Zimmer further emphasize the finding of such sweet spot: 80% of “seats” on our highway are empty. WOW! People are already driving on the highway from point A to point B, with some degree of waste: empty seats meant overpaid gas. I mostly drive alone between places and have always been bitching about the fact that I have to drive my 4 wheels on a full tank of gas and 3 empty seats. I guess I am not alone. Zimride is selling 6000 seats between San Francisco and LA each month, equalling to 100 flights, saving people at least $100 for each round trip – that is $600k saved alone at such an early stage of zimride.

@7x7SF has a great article about the sharing economy, contributed by @shareable (shareable.net) cofounder Neal Gorenflo and the author of the mesh Lisa Gansky, claiming whats sexy about sharing is because “Unused value equals waste”, and sharing provides the opportunity to identify waste and convert it to value. I wholeheartedly agree.

Depending on the frequency of people’s incumbent “behavior”, such as airbnb’s having our own place and need to travel, zimride’s mid/long distance highway driving, the scale of the “sharing” economy can be different. Airbnb targeted human behavior is inherently more “frequent” than zimride, so it will be hard for zimride to reach airbnb’s scale.

Take adventurous travel industry as an example: my list shows many startups attempting the “travel experiences”. Vayable is my favorite one with beautiful design, elegant approach. Granted, every human being on earth would LOVE to travel to somewhere exotic and experience something new, arguably, vayable and the likes could be tapping on a HUGE market. But, fantasy isn’t reality. Perception often is closer to reality. In reality, what is there in “travel experience” field the “things that people are already doing with some degree of wasted resource” that is critical to creating insanely successful sharing economy, other than logistic needs? We can argue that everyone has “hometown” and favorite places, and their knowledge and experiences with these places are unique and can be pleasantly shared with other human beings. And not sharing that experience IS a waste of resource and we can convert that experience to value, which is whats sexy about sharing economy.

2ndly I think there is another element of being “chore like” in those things that people do with waste, for a sharing economy to truly reach economy of scale. Airbnb and zimride are not only “sexy”, they are also killing a market pain. They are more of “pain killer” than vitamine. They have potential to become necessity. Adventurous travel industry lack the “pain” and the “chore” needed for people to truly, desperately seek out alternatives, hence it’s harder to reach the ultimate success of airbnb and zimride.

Finally, the 3rd element is creating meaningful human interactions. large and small, sharable economy startups succeed in creating more interesting relationships among people in addition to solve “logistic needs” they set out to do. These solutions make us more social, happier through peer to peer, face to face, real world interactions.

What does it mean to us entrepreneurs? Go look for the pain in what people already be doing with waste, then imagine a solution to convert it to value, then go ahead build a product to amplify the value through saved resource and happier human interactions.