The Sharing Economy

Mark Suster

@msuster

LeWeb London, June 2013

What new can a VC really tell you? 2

After 2 days of the sharing economy

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I thought I’d give some context to

Why sharing / collaborative consumption?

Why now?

What next?

Prices

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Network

Drivers of our Future World

Economics Un / under-

employment

Debt

Globalization

Scarce Resources

Transparency

Demographic Shifts

1. Prices

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The common theme of the

biggest Internet successes has

been “deflation”

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Biggest Internet players “disrupted” incumbents on price

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Disruptive Technologies are

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Functionality /

Performance

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Lower Margins

See “Innovator’s Dilemma - Clayton Christensen

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Significantly Lower Prices

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Disruptive companies offer LESS functionality & compete

with “non consumption”

See: http://www.bothsidesofthetable.com/2011/12/22/the-amazing-power-of-deflationary-economics-for-startups/

It’s why the TV industry still can’t get its head around

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1 billion monthly uniques 4 billion hours > 150 videos watched / year for every human

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3.4 billion video views / month

> 25,000 video creators

250 million subscribers

80% audience 13-34

40% mobile

2. Network

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Of course we now know that 1/3rd of world is now online

13Sources: U.S. Bureau of the Census, World Bank

1995 2000 2005 2010 2012

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411

1,019

2,019

2,291 World Internet users (M)

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And per Mary Meeker’s slides we know the audience (& opportunity) is now global

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In just 4 years 71% of the world’s literate population will have a smart phone

Source: Benedict Evans (http://www.slideshare.net/bge20/2013-05-bea)

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Incumbents simply find it too hard give up juicy margins

NetworkPrices /Margin

Startups should focus on non-consumption & they will find it hard to compete

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3. Economics

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Student debt in US along = $1 trillion. $100 million new / year. 2x rate of 10 years ago.

19Source: the Atlantic: http://www.theatlantic.com/business/archive/2012/10/europes-most-tragic-graph-greek-youth-unemployment-hits-55/263118/

We are risking an entire generation who don’t get on the career ladder

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The sharing economy isn’t new. It’s just more urgent

Un / under-employment Debt Globalization Scarce Resources Transparency Demographics

And it’s not going away

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Trade Guilds

Wage Protectio

n / Limited Supply

Top down organization struggling to keep up with innovation or needs of

the people

Universities

High-Paid Jobs

Government

Taxation, Currency

When governments can no longer properly look after their people, people will look for themselves

Capitalism.

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In the past forced migrations were the only answer *

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Increasingly IT-enabled people can tap into global demand networks

* We are of course seeing a world of digital have’s and have-not’s. Mobile phones bridge this gap. Who will develop services for the worlds poorest?

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Thomas Friedman

said it best

some of world’s most talented people live in economies that can’t pay them a “global market price”

The sharing economy will have new “market-makers”

Will they all be benevolent in the future?

Market forces, transparency & new disruptions must keep them in check

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Radio. Television. Telephony. Twitter. It’s the natural extension to a global, transparent world.

Open = empowered. But also aware. And disenfranchised.

Of course all of this open data can be mined in real time. For business. And government.

For marketplaces this can help with trust, authority, safety, marketing, & planning.Note: I’m a proud investor in DataSift

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1. THE ECONOMICS OF “GLOBAL”

Comparatively richer countries want to tap into enormous pool of intelligent resources in countries with lower wages

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Some of the world’s most talented film maker’s can’t just relocate to Los Angeles

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Artists struggling to earn a global wage suddenly find demand at higher prices

30 million registered users

65 million month uniques

2.5 billion monthly page views

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2. EMPOWERING THE

UNDER-EMPLOYED

With large underemployment people can earn extra $$ staying at home, while satisfying demand to avoid kennels.

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And this is true of many of the peer-to-peer marketplaces.

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3. MOVE FROM HIERARCHIC TO

FLAT STRUCTURES

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Lending Club now so widely accepted even used by hedge funds to invest

directly in consumer loans

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And of course startups can now more easily tap into pools of angel investors directly

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3. REMOVING PHYSICAL

BOUNDARIES

By removing physical boundaries you create win-win opportunities for both instructors & students

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Example Industries: Education Music Lessons Personal Trainers Psychologists

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4. EFFICIENCY GAINS IN EXISTING

MARKETS

Many of these markets exist, the Internet is just making them much more efficient

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So What’s Next?

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HELPING BUSINESSES TAP

INTO PEER NETWORKS

Entrepreneurs often start with consumer ideas. Helping enterprise tap into peer networks may prove even larger

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Recap – in a world of economic challenges & large

networks … the “sharing economy” will thrive.

Will you find your place in it?

The Sharing Economy

Thank you!

Mark Suster - @msusterLeWeb, June 2013