The rapid and impressive rise of Uber and Airbnb in revolutionizing the car service and lodging industries is a testament to the rise of the “sharing economy.” In the sharing economy, assets that are traditionally owned and utilized by a single person for a single purpose, such as a personal car or personal apartment, are repurposed for use by those willing to rent or borrow it at a price. But this sharing also requires data. That data comes from digital platforms that connect buyers and sellers. Digital platforms enable such commerce. Such a repurposing of assets is timely and speaks to the general abundance in supply found in various asset sectors. How many cars do we really need if cars were shared? My guess is we will find out in the coming decades, and automobile manufacturers will not be pleased with the answer. Parked and idle cars in personal garages will be uncommon, and instead will be dispatched for sharing. Today, cars are summoned with a mobile app. In the near future, the car may even arrive autonomously without a driver, with the seats adjusted to your liking and the car playing your favorite music (I hope).
With Airbnb, the challenges of finding a room during a peak period are reduced. In theory, any and every room can now be rented. It challenges the lodging industry and the tax systems built on hotel stays too. Regulation is challenged by the sharing economy. It pits entrepreneurs against big business and governments. Society roots for the entrepreneur. The entrepreneur has something else – data!
As exciting as we find the sharing economy, it is important to remember that it is predicated on a sharing of data. This is important to its success now and in the future. Drivers and riders of Uber and similar ride services are empowered because precision in rider (demand) and driver (supply) information is captured and shared through a marketplace, so that each side can make rational economic decisions, such as a driver driving a few more hours to accommodate rider demand, or a rider accepting a surge price during a peak period. This sharing is largely enabled by the ubiquitous mobile platforms that are changing how we do business.
For Airbnb, the sharing of information is enabled by the low cost to share photos, videos, and reviews, and also by the ability to track local hotel prices algorithmically. Such offerings have inevitably raised consumer expectations on the availability of such features. All of that requires the sharing of data, most notably before any commerce is conducted. The data is given away! For Uber and Airbnb, the data is there to be shared– in particular to be shared through data products, customized to each user.
As many firms aim to capture value from the ensuing Big Data tidal wave, sharing data may be the right strategy. It may not seem obvious at first pass, but sharing data can be more valuable than keeping it proprietary. For Uber it is worth about $41 billion and for Airbnb, it is worth $10 billion. Good thing, they gave away data!