It’s no secret that sharing economy is here to stay. Find out how coworking plays an important role below.
The concept of economics at its core relies on the transfer of goods and services between individuals and looks at the collective whole that results from this network of relationships. Sharing has always been a part of this network since time immemorial.
Yet the sharing economy is something special, a construct born from the interconnectivity afforded by the Internet and an interest in sustainability and resource depletion spurred by the Great Recession. Not since the very beginning of city-state trade and the birth of the Silk Road has humanity made such a leap towards global communal economics, the kind that transcends borders and time zones.
The impact of the sharing economy is far from silent, despite the fact that few people know the meaning of the term, or that the sharing economy even exists. It’s meant to describe the phenomenon of the gig economy, of commercialized carsharing, of real estate sharing facilitated through companies like FlipKey and Airbnb, and the phenomenon of coworking.
What is the Sharing Economy?
The characteristics of the sharing economy are as follows: it is an IT-based peer-to-peer economy wherein goods or services are shared between individuals through an intermediary without a transfer of ownership. In other words, one person owns something and uses an online marketplace to offer the use of it to others for a fee.
The sharing economy is understood as a major force of market disruption. For example, commercial real estate, the hotel industry, and taxi services are established and highly regulated industries.
The sharing economy has seen companies like Airbnb, WeWork, and Uber explode in growth and company valuation as a result of disrupting these markets by involving privately owned assets and property and monetizing the use of these privately owned assets and property among a customer base, with all transactions being peer-to-peer (between owners and tenants/renters).
The Internet and information technologies lie at the very center of this economic revolution. The ability to expedite and compress transactions between individuals into as few actions as possible helps speed up consent and monetary flow between peers and allows people to use another individual’s resources as conveniently as possible.
Companies as intermediaries serve as another important reason for why the sharing economy has grown so rapidly. Because they carry minimal risk and simply facilitate the transactions between other people, these companies have been able to maximize growth and focus on building profit instead of using their revenue strictly to acquire more properties and assets to rent out, with a few exceptions.
If you are confused about what the sharing economy really is, think of it as the digitalization of renting out the use of your property to others around you. It isn’t truly “sharing” in the sense that there is nothing altruistic about the way this economy works.
Instead, the pragmatism behind the sharing economy comes from a willingness to reduce wasted space (by letting others use your home while you’re out for vacation, for example), as well as provide an opportunity to generate revenue through your property (as through gig economy examples like Uber and Lyft).
Its growth is also owed to the relative newness of the concept of a digital intermediary marketplace for peer-to-peer transactions, where a lack of regulations means an opportunity to maximize profit and minimize liability.
The Growth of the Sharing Economy
There is no question about the growth of the sharing economy, and the economic model of owning less, and renting more – from apartments to goods, cars, working spaces, and various services.
The last decade has seen a proliferation of sharing economy-based platforms, in industries ranging from banking to hospitality, risk capital, transportation, and more.
Some people think of this as a change in mindset between the generations, as millennials appear more frugal and less inclined to splurge on ownership. Another argument to be made is that owning things is substantially more expensive, given the drop in buying power and rising cost of living in face of stagnant wages and record-breaking wealth inequality.
Whether the sharing economy is a breakthrough in entrepreneurialism or the result of the economic crisis at the turn of the millennia, or a pragmatic combination of both, the result is a form of crowd-based capitalism that allows for the full use of products and services at a fraction of the cost of their total ownership, on a temporary or rolling basis.
The Result of the Pandemic
The pandemic has proven to be a difficult adversary for businesses built after the sharing model. Challenges posed by hygiene concerns, limitations in physical contact, and hesitation to rely on the standards set by intermediaries rather than traditional service providers have put a hamper on the growth of the sharing economy.
Nevertheless, there has still been potential growth for these companies by minimizing the cost for customers, while providing a way for owners to monetize their assets during a crisis.
For example, the gig economy has seen a boom of workers seeking an opportunity to make money, as the availability for steady employment plummets. Companies like DoorDash became pseudo-essential, as people stayed home and avoided heading out for food.
Just as the economic crisis and growth of Internet access birthed the sharing economy, the pandemic crisis provided opportunities for growth amid industry worries. To be born from a crisis is not a bad thing, however – it’s a symptom of an overwhelming supply of underutilized assets, and a generation of startups, companies, and individuals who might not have the means to be owners themselves.
The Sharing Economy and Coworking
The growth and success of the coworking model, even amid a pandemic, is another success story within the sharing economy.
Workspaces are critical for businesses who cannot rely on work-from-home policies or wish to adopt a work-from-anywhere policy while providing a professional setting for their workers. Yet owning a workspace can be prohibitively expensive, especially for smaller teams and startups.
Limited budgets and the need to scale quickly in a competitive economy have paved the way for coworking spaces to become a successful alternative to traditional office spaces, by allowing companies to utilize a fraction of their budget on the cost of a workspace, versus a substantial portion of their starting capital.
COVID proved difficult for coworking spaces, due to concerns surrounding hygiene and social distancing, but proper in-space policies such as regular deep cleaning, on-site rapid testing, contact tracing, mandatory mask-wearing, and on-site social distancing have helped coworking spaces adapt and thrive as an alternative for individuals who cannot adapt to work-from-home policies, or miss the communal spirit of an office space.