Sharing economy companies are going mainstream

SAN FRANCISCO: A few years ago, renting a guest room through the Airbnb accommodation site was daring. Now, in thousands of cities around the world, it seems almost conventional.

But as the founders of the emerging category of “sharing economy” companies are learning, mainstreaming brings a whole new set of legal and regulatory challenges. Sharing companies allow people to share anything from a car to a house to an office, using the internet to verify and match those who have something with those who need it.

Sharing economy entrepreneurs say their businesses are a boon to the economy because they enable productive use of assets that would otherwise go unused. And they can empower all kinds of people to start their own small business.

“We could create millions of entrepreneurs who don’t fit into the market system,” Airbnb co-founder and chief executive Brian Chesky said during a panel discussion at the Reuters Technology Summit in San Francisco this week. .

Airbnb itself is an entrepreneurial phenomenon, with venture capitalists valuing it at $2.5 billion. Sharing companies such as RelayRides (rent your car), LiquidSpace (rent a free workspace) and TaskRabbit (rent your free time to run errands) are just a few of the myriad of new companies offering models of ” share”.

“Certainly it’s becoming mainstream,” said Jeremiah Owyang, an analyst at research firm Altimeter Group. Peer-to-peer rentals of goods such as toys and electronics are already a $26 billion industry, estimates Rachel Botsman, author of What’s Mine Is Yours: The Rise of Collaborative Consumption.

But going beyond small circles of like-minded people in tech-savvy cities to becoming national or global services with millions of customers is no small feat.

Airbnb has run into local regulations in many cities that restrict how rooms can be rented out. In New York, for example, the city fined Airbnb host Nigel Warren $2,400 for renting out part of his apartment in September.

A judge ruled in May that Warren violated a law prohibiting short-term rentals by residents; the city’s Environmental Control Board granted him an extension until July 15 to file an appeal. Many cities have similar laws.

But Airbnb’s Chesky said he thinks educating officials on the merits of his company could cause the city to soften its stance, citing examples such as Amsterdam, where the city was originally against Airbnb and now allows it, he said.

One tactic: convince officials that Airbnb contributes to the local economy. Earlier this month, Airbnb released research showing that guests and hosts in Paris contributed $240 million to the local economy; Airbnb customers stayed an average of five nights, compared to two for those who stayed in hotels.

Similarly, insurance companies are struggling with how to manage car-sharing companies, in some cases discouraging their customers from working with them.

RelayRides provides car owners with $1 million liability insurance during the rental. In other words, the owner’s existing car insurance would not kick in if the rental driver had an accident, according to RelayRides general manager Andre Haddad.

Reuters

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