This week, we speak with Arun Sundararajan, professor at NYU’s Stern School of Business. He has spent much of his career investigating how digital technologies shape the economy and transform employment, and eventually led to his writing The Sharing Economy: The End of Employment and the Rise of Crowd-Based Capitalism.
We discuss how early companies such as eBay, craigslist, and Amazon have “digitized trust” – early reviews of people and services were the predecessor to modern sharing platforms.
The “digitization of trust” has become an enormous economic factor: more than a million people stayed at an AirBNB last night (AirBNB now has three times as many listings as Marriot has rooms); The complacency of the entrenched taxi industry led to the success of Uber and Lyft, but also required significant trust on the parts of both driver and passenger.
Sundararajan discusses the rise of crowd-based capitalism and crowd funding, as they seek to supplant traditional financing models. He references that over the ast 6 years, nine million people pledged $2 billion for hundreds of thousands of projects on Kickstarter alone.
We also discuss the impact of “underutilized capacity and shareability.” As an example, consider the 80 million power drills in the US – each drill is used on average a total of just 13 minutes over its lifetime. Cars spend most of their time parked, doing nothing. Spare rooms sit empty, couture dresses hang forlornly in closets, etc.
Sundararajan also discusses how the Gig Economy is impacting labor: there are 53 million freelance workers in America; one in four are working part-time to supplement income from their regular jobs. And, he points out that the sharing economy sees the greatest gains going to lower income households as more consumers switch from owning to renting. Services such as Getaround, Zip Car, Drivy, Rent-the-runway, StyleLend, etc. raise interesting questions about the future of ownership of goods and property in America.
You can hear the full interview, including our podcast extras, at iTunes, Soundcloud + Bloomberg. All of our earlier podcasts can be found at iTunes, Soundcloud and Bloomberg. (Please send your suggestions for future topics to MIBPodcast at Bloomberg dot net).
Next week, we speak with William McNabb, CEO and Chairman of the Vanguard Group.