Last month I had the honour of being invited to lead a discussion at The Moxie Sessions. The topic for the evening was the peer to peer or sharing economy. We're pretty excited about the community we developing at YourDrive and are we're excited about the future of peer to peer car sharing in New Zealand. Increasing we hear about a new Uber for 'x' or AirBNB for 'y'. There is a lot of new business ideas in the sharing economy it was great to discuss the trends and some of the common myths and misconceptions. Vaughn Davis did a full write up in the National Business Review.
At YourDrive we think the future of peer to peer car sharing is bright. The average vehicle in New Zealand sits around 96% of the time. There is a huge inefficiency in the current model and our increasing vehicle and use numbers highlight that there is latent demand for peer-to-peer car rental. During the discussion, I shared some of the lessons we've learnt over the last couple of years and some key things to think about if you're considering business in the sharing economy space. Over the last few months, I've developed what I think are the three most important keys to success in a sharing economy business
- Return for owners - The return for owners must be large enough to make it worthwhile. Airbnb works so well because housing/accommodation is so expensive and therefore homeowners can get quite a large return. If it takes lots of effort to rent something out and the returns are low then owners won't get involved. Vehicles are the second most valuable personal asset and YourDrive has already had owners make over $2,500.
- Network scale - All peer to peer (p2p) businesses are subject to the network effect. Basically, the more people you who are using a service the better that the service is. If we get more vehicles on the YourDrive platform, then there is more choice for renters; and more renters, mean higher returns for vehicle owners.
- Stickiness - For a platform based business you need some reason for users to continue to come back. If users can achieve the same results without using the platform then the will naturally try and circumvent it to avoid fees. Users could arrange to sort a rental outside of YourDrive but they can't guarantee a safe transaction and they may not be insured.
If you look at any successful sharing economy business they have all three of these elements in some combination. If you are thinking about an idea within the space then don't be afraid to get involved, but do your research first. There are still many ideas within the sharing economy that meet these criteria and haven't fully been tested yet and I'm confident the sharing economy is just starting to bloom and will continue to flourish.
If you want to keep the conversation going you can get in touch with me on twitter @oscarellison.