(This article was originally published on TechCrunch with a Shutterstock image. Here I republish it with one from Getty Images, and a bit of extra thinking prompted by some readers' comments.)
Words are impactful. They may not break your bones, as the saying goes, but they do guide the way we all think, debate, decide and act.
When it comes to the words we use to define our industry — the one commonly referred to as the “on-demand,” “sharing” or “gig” economy — we must choose more carefully.
Sure, we all try to keep up with the blistering pace of technology. But we should be even quicker to think ahead in terms of the words, concepts and frameworks that ultimately describe and define what we do.
At a recent (impressive) industry conference, the conversation came to revolve around which “on-demand” company would fail next. That is the wrong question to ask. Rather than cast backward-looking stones, leaders in this space should reflect on how far we have come, and start defining the future we are working so hard to build.
What we should be talking about is smart marketplaces, which is a more accurate, realistic and helpful category. But first, here’s why we must trash the old terminology.
The “sharing economy” term was naive at best, destructive at worst. Very few people share stuff for free. It’s not that people don’t care, as Fast Company reporter Sarah Kessler wrote in her recent article, “The Sharing Economy Is Dead, And We Killed It.” It’s just too much of a hassle. We’re all too busy. If you ask someone, in theory, if they would loan their neighbor their power drill, of course, most people would say yes.
But then you get down to the details of it: What time can you meet them? Is it charged? When will you get it back? What if they break it or misplace a bit? Suddenly, people decline. It’s not because they’re stingy or uncompassionate, but rather because they have a running list of a thousand other, more pressing things.
“Sharing” was a ridiculous, idealistic promise that was doomed from the beginning. Uber should stop calling their drivers “partners,” because the only people they might be fooling, at this point, are themselves. Major news publications know that the only “sharing economy” is so-called. Let’s make it never-called.
On-demand isn’t new and disruptive, as it has commonly been billed. There has always been the option to call a taxi, hotel or pizza shop to get a ride, room or dinner delivery whenever one so “demanded.” Yes, companies like Uber, Airbnb and Postmates have made it easier, faster and more ubiquitous to get what we want, when we want, through the use of mobile apps. And they’re great.
But in reality, it is not the “on-demand” aspect that is new or, even for that matter, the most important. “Sharing” is deceptive, and “on-demand” is a red herring.
Even the “gig economy” tells only half of the story. It’s better than “on-demand,” because at least it describes a qualitatively new phenomenon. People can now earn meaningful amounts of money by applying their skills, resources and insights in their spare time.
The problem with this term is that it implies people are stringing together multiple freelancing “gigs” in lieu of a full-time job. Some people are attempting this, but many others are applying their resources when they feel like it, and are free to stop as soon as they don’t.
The bias promoted by the term “gig” is particularly destructive because it confuses politicians — including current presidential hopefuls — leading to a misplaced, confused concern for contributors whom they fear are being swindled out of a “real” job.
It would be more realistic to recognize that smaller bits of useful economic activity accomplished through the gig economy is inevitable, net positive and self-policing. In other words, companies that do not properly value their contributors will inevitably go out of business (Homejoy is an early example, but surely not the last, as venture capital markets tighten and the invisible hand of competition does its thing).
Words matter. There is a shakeout coming in the private tech space. Companies who confuse themselves, their employees, customers and investors by claiming to be in the “on-demand,” “sharing” or “gig” economy are sub-optimizing their decision making, at best. It would be better if journalists, analysts and, most importantly, entrepreneurs start talking about the “smart marketplace” economy.
A "smart marketplace" (1) matches supply and demand efficiently - which entails providing fair value to both sides; (2) adds value in the process; (3) reduces friction or "middle steps"; and (4) avoids disintermediation. If we look at companies like Spare5, Lyft, Postmates, Uber, AirBnB, Rover and so many others through this lens, then we benefit from four objective criteria by which we can evaluate their performance. We also benefit from a huge collection of economic literature and best practices.
The prevalence of big data, smartphones and cloud computing creates an unprecedented opportunity for companies to match supply and demand in entirely new ways. A smart marketplace has the ability to add value, balance supply and demand and avoid the middleman. What’s great about Uber, Lyft, Postmates, the WeChat payments ecosystem, Rover and Spare5 is that they match excess supply that would otherwise go unused.
They also make their services safer and provide an all-around better experience. Not perfect; not shared; yes, on-demand (yawn) and only sometimes as a “gig.”
The sharing economy isn’t dead. It never existed. It’s all about smart marketplaces and ultimately the best will win, and the ill-defined will fold.