It’s good to share

x Sponsored content on Research Live and in Impact magazine is editorially independent.
Find out more about advertising and sponsorship.

Digital was the catalyst for the sharing economy, but what else has been important in establishing it as a viable business system?

Drummond Gilbert: The last recession was a massive driver for the sharing economy. It induced a very real cut to household disposable income and this – combined with the uncertainty about people’s future prospects – made them very creative about how they tried to make (and save) money.

The Stern Review of climate change in 2006, which largely disproved objections to climate change – and a millennial generation that demonstrably valued experiences over ownership, driven by the proliferation of social networks – meant that there was an audience in place to engage.

Technological developments also played a significant part. For the first time, sharing-economy platforms were able to leverage the social graph from networks such as Facebook, to create trust between users. What this means is that the idea of someone you don’t know being a stranger is rapidly dying out. 

There is an argument that the sharing economy is simply digitisation – how would you counter that?

DG: There is a valid argument that the behaviour of the sharing economy existed before the proliferation of apps – but what is new is the scale. People would stay in B&Bs before Airbnb existed, and people might have hitchhiked before GoCarShare. But what the sharing economy has enabled is for this to take place, and for a market to ‘clear’, at a much larger level than was previously possible.

There may be hundreds of people who make the same journey at the same time, for example, but without an online platform they would never be aware of other people travelling the same way, and wouldn’t have a way of contacting them, or knowing whether they could trust them.

What drew you to car sharing as a business model?

DG: I was walking down the street near to where I live, in west London, and noticed that pretty much everyone stuck in the traffic jam was the only person in their car. I was struck by the ridiculousness of the situation, and the potential impact that car sharing could have, both on reducing carbon and congestion. It was only later that I realised the scale – there are an estimated 38 million empty car seats travelling around the UK.

What hurdles, in terms of customer behaviour, have you had to overcome?

DG: I hear it quite a lot when I start telling people about GoCarShare – at first they say ‘good idea’, but then they follow that up with, ‘what if I was to get in the car with an axe murderer?’ It’s hard to say exactly where it’s come from – maybe American horror films – but there is definitely a stigma of getting in a car with someone that you haven’t met that is hard to shake.

What has helped are testimonial videos of people who have used the service, talking about their experience; we found that this humanised it and brought it to life.

One thing we will probably have to accept is that there is a certain group of people, mainly an older generation, who are proud of their car; they value the time on their own; they probably listen to Radio 4 – they’ll never use our service.

Have there been any regulatory issues?

DG: Companies such as Airbnb and Uber employ a team of legal experts and public policy advisers because they often find themselves in legal grey areas.

We don’t have any regulatory issues as such, but we do have a law – dating back to 1981 – that means people can only cover their costs by car sharing, not make a profit from it.

With congestion expected to cost the UK economy an estimated £300bn over the next 16 years – and the saving made from car sharing often cited as the most popular reason for people to do it – we’re hoping that this will one day change. We are already having a dialogue about this. 

Have you faced any open animosity/lobbying from the car or car rental industry?

DG: No, although we have a French competitor who launched in the UK with an aggressive promotional campaign without understanding the dynamics of the market. It did have a lot of problems, particularly with taxi drivers commenting on their social media posts, saying that – if customers used the service – it would invalidate their insurance.

There are some lofty claims associated with the sharing economy – such as its sustainability – but those who often make money out of it have assets already, so does there need to be an added element of purpose?

DG: Most marketplaces will have underused supply that the platform distributes in a more effective way, allowing new people to access it.

We have our supply – empty car seats for journeys; our drivers, typically, are a bit older and better off than our passengers – but, importantly, we are helping both sides of the market benefit economically. Also – another important point – building a marketplace is hard work and takes so long that, without a team with conviction and passion, it will never get off the ground.  

You helped set up the UKShareCo trade body – why do you think there is a need for an organisation of this sort?

DG: A few of us who were setting up sharing economy platforms started to realise that – although we were all moving in slightly different areas – we had a lot in common, and a lot of the challenges were the same. By sharing our learnings, we could all improve our chance of succeeding. We started to have monthly meetings and organised joint marketing and events.

Also, when it came to lobbying government, we could have little effect individually, but, collectively, we could start to have a real impact.

Where next for the sharing economy?

DG: What I have noticed is that, to date, the platforms with most traction have been the ones that use high-value items.

Airbnb lets people monetise their house, their highest-value asset; Uber (and GoCarShare for that matter) allow people to make money from their car, often their second most valuable asset.

Platforms that allow people to borrow or rent household goods from each other are, generally, yet to hit critical mass because, I believe, people perceive the value saved from borrowing the goods to be less than the time cost involved in borrowing them.

As more and more people become involved in the sharing economy – and the friction decreases – I expect this to change and for the sharing economy to enter more and more aspects of our daily life.