Sharing Economy

The world is at an inflection point as the formal frameworks of establishments are becoming obsolete and challenged by the collaborative, network and sharing economies which were created by internet platforms such as Asset Sharing Platforms (Uber, Didi Chuxing,Airbnb, Tujia), Open Source Platforms (My SQL, Perl, Apache), Platforms to share Application Programming Interfaces ( APIs), SDKs, (Apple iOs, Android, Google Maps, Gov.net), Platforms for Co-Creation (Miaopai, Youtube, Wikipedia, We Chat, Facebook etc), Crowd Sourcing / Funding Platforms (LuFax.com, Lending Club, Kickstarter). Network/Sharing or collaborative economy thrives on sharing, openness and connectedness.

Open Source and API sharing are some of the key tools contributing for the fast growth, augmenting Start-ups and Unicorns ecosystem, outside US. 

Traditional /Legacy Economy Network/Sharing or Collaborative Economy
Traditional Hotel – Starwood, Hilton Hotel, Accor Hotel
1. Own Hotel Rooms
2. Asset Building
Room Sharing Platforms –Airbnb, Tuijia
1. Assets are not owned, but provide access to spare rooms of House owners.
2. Empowering house owners to become Micro-Hoteliers.
3. Facilitate communication between host and guest.
Car Rental - Hertz
1. Own Asset/ Cars
Ride Sharing, Ride Hailing Platforms – Uber in China backed by Tencent, Didi backed by Alibaba, Yongche backed by Chery, Lyft backed by General Motors, Zipcar owned by Avis
1. Time sharing of drivers, Car Sharing. No Asset ownership
2. Slicing excess capacity, Crowd Sourced, Reduce idle time, Maximisation of Occupancy
3. Empowering drivers, reduce isolation by building a community
4. Facilitating communication between drivers and passengers
5. Use of Big Data, AI
Cable TV
1. Owned or licensed content
2. Content are pushed
VoD Platforms - YouTube, Yokou Tudou, Toutiao, Miaopai, ,Taobao Live, JD Live
1. User Created Content
2. Platform for Participation, interactively communicate with the host and the audience
Traditional Incumbent Banks
1. Owns asset
2. Limited Partnerships, Vertical Integration
Collaborative Financing Platforms – Lufax.com, Lending Club, Kickstarter
1. Crowd Sourced peer to peer Funding
2. APIs on data are released to Co-Create applications with 3rd parties. Value Creation
Traditional Closed Software – Microsoft , Oracle Open Platform, Free and Open Source Software –Android, My SQL, Mozilla Firefox browser, Web Server Apache, Content Management systems like Word Press, Drupal, Linux
1. Slices, Aggregate and Opens Excess Capacity
2. Peers form a community for decentralised development
3. Crowd funding
Incumbent operators – Traditional Banks, Telecom operators, Opening Platform through APIs – Google Map; Chinese Tuijia hotel share web site share APIs with travel sites such as CTrip and eLong and We Chat Wallet; Uber APIs were released to collaborate with Hyatt Hotel Chain, Trip Advisor travel site, Starbucks; Facebook Login feature for Trip-Advisor and other sites; Twitter feeds to other sites; Airbnb is offering Facebook integration; AI platform of Baidu Ventures is opening to manufacturers of cameras, 3D sensor, IoTs, virtual retailers, logistic companies to make “The Biggest AI ecosystem in China” which is at the disposal of Start-ups. Baidu’s Automatic Diving Technology developed on AI had also been opened to others as an Open-Source Platform.
Economic advantages of Sharing Platforms

The Sharing economies are built on Platforms that has been challenging traditional legacy economies. They are gaining a foothold in Asian, European and American region. Network companies are highly scalable and create value through customer co-creation, advocacy, and sharing. Growth, profit and scaling advantage of network or shared companies result in unprecedented market valuations compared to Traditional companies (see Figure below).

  1. Applications and Devices – Smart Phones, location-based GPS, Apps Stores, Different Secure Payment modes such as Credit Card / Pay Pal/ Ali Pay, IoT
  2. Big Data and Trust Enablers – Social Media, Ratings and Reviews and massive data crunching through Big Data Analytics provide a level of trust and credibility to apps like Didi, Grab or Uber. These Platforms had developed in a Collaborative Eco System using Big Data. Example: 1.Directing drivers to locations where the probability of finding a fare is high. 2. Via big data platform, a customer can see closest drivers and their ratings.
  3. Applications Programming Interfaces (APIs) – API enables developers to connect their software to another companies’ data and software and more.

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Written by djdevinse

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Didi Chuxing, Uber’s equivalent in the Middle Kingdom