D.R.E.A.M.ing of Collaborative Consumption

In late June I was lucky enough to be invited to speak at the Convergence' Conference in Paris. The conference (known as 'Verge*' in English-speaking countries ) brings together commercial leaders from large corporations and a group of social entrepreneurs. One of the key topics at this year's conference was ‘collaborative consumption’ and the radical impact that this is beginning to have on established business models.

Also known as the 'peer-to-peer' economy, collaborative consumption essentially involves the use of platform technologies on mobile devices that allow consumers to use various assets without actually owning them. As Rachel Botsman, the doyenne of the movement has put it, "Technology unlocks the idling capacity - that could be a spare room in someone's house, the spare seats in someone's car or investments that you don't have in the bank." In other words, these models help to use existing infrastructure whether it be cars, bicycles, rooms, bank balances or consumer electronics much more efficiently with correspondingly reduced environmental impact.

The subject had particular personal relevance as my trip to the conference included accommodation using Airbnb, one of the best known examples of collaborative consumption that is focused on the renting of apartments, rooms and even couches through their on-line platform (I went for an apartment). At the beginning of July 2013 the site had had 10 million nights booked through it, with over 300,000 listings in 33,000 cities in 192 countries. Not bad for a business that was founded in late 2008. One of the most interesting presentations though came from the CEO of a business called BlaBlaCar, a car-sharing service, so-called because when you register on the site you have to register as being either 'bla' (not very talkative) to 'blabla', and at the top end of loquaciousness, 'blablabla'!

A critical feature underpinning nearly all of these collaborative models is the need to generate real trust between users of the service. Blablacar has distilled their approach into six key ingredients. Users need to:

  • Declare who they are and provide some biographical details
  • Be Rated by other users of the service
  • Engage the service by making a financial payment upfront
  • Be Active so that other users can see a response
  • Know that the system is Moderated (e.g. payment details confirmed, addresses verified etc.)
  • Be linked to other Social networks which establishes connections between wider groups of people

According to Blablacar, friends and family score 4.5/5 on this framework. Users of the network give each other nearly as much with an average score of 4.2. In fact, a competing company enabling neighbours to rent each other’s cars found that far from being the barrier that they anticipated, meeting neighbours turned out to be the most appealing aspect of the service.*Those with advanced conversational French will understand the pitfalls of using this title in France!

Written by Seb Beloe, WHEB Asset Management
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