>>presenter: Rachel Botsman and Roo Rogers, the author of What's Mine is Yours: The Rise
of Collaborative Consumption. When I got the blurb for this book, I was really excited.
Then I saw Rachel's TED Talk and I was even more excited. She was a fantastic speaker
there and I expect her to be a fantastic speaker and then I read the book; loved the book.
In fact, I've been, evangelized everybody on my Facebook page to on my Buzz, on my,
talking to my friends in person. My friend's 14 year old kid was super glad to hear about
share.com cause he's now getting full value for his video games as opposed to half at
GameStop. So, it, I think you're gonna find these ideas super interesting, both personally
and professionally. I think you know about some of these companies and I think you're
gonna find some new companies you haven't heard of that will be useful to you, but I
think the book is more than something that's interesting both personally and professionally.
It's also a different way of thinking about the world. It's a way, I said, I think we
can get by, get past some of the kind of roadblocks that we've got on public discussions. Because,
I mean, think about it. Sharing for fun and profit; what could be more socialist or more
capitalist? So, it's a chance to transcend old problems. Please welcome Rachel and Roo.
[applause]
>>Rachel: So. Good morning, or good afternoon, everyone and thanks for having us today. So,
I'm gonna talk to you about the rise of collaborative consumption. And Roo and myself have been
doing interviews for the last couple of weeks and the most popular question is, "Is this
a reaction to the recession?" So, today I'd like to talk to you about why this isn't a
reactionary blip to the recession, but a fundamental change in the relationship between producers
and consumers and the beginning of what we think is a revolution in identity and ownership
that could become as big as the Industrial Revolution or even the Information Age. So,
today we thought our focus would actually be on technology and how technology enables
trust between strangers, and how this is reinventing sectors from retail to banking to food; creating
massive workspaces of opportunity. So, to get started, I thought I would start with
an example you're all very familiar with, which we call the Godfather of collaborative
consumption, which is eBay. Now there is a popular Silicon Valley legend that eBay started
when Pierre Omidyar wanted to help his girlfriend sell and collect Pez dispensers. This is,
in fact, a myth made up by a PR whiz. The real story, whoops, it is Murphy's Law today.
The real story is that Pierre actually put this broken laser pointer up for auction on
his personal website as an experiment. And he was even astonished within 24 hours when
a bid came in for 14 dollars and 83 cents. So he contacted the winning bidder to make
sure that he knew it was broken and the guy wrote back and said, "I'm a collector of broken
laser pointers." Now, it was in this moment, that Pierre knew he'd hit on something really
big for two reasons. One, he realized, that it was actually a massive opportunity to redistribute
things that were unwanted or worthless to one person. And then secondly, that had an
immediate value to someone else. And what he also realized was that the Internet had
created this massive match-making machine, with the power to match person A's "have's"
with person C's "wants" with whatever they may be. So, no longer was the coincidence
of "wants" a problem. So, in other words, the Internet had created the efficiency and
access for us to trade peer to peer. But it also did something critical for eBay, and
also for collaborative consumption, was that it created the social lubricant, or trust.
In other words, we know had the technology to create trust between strangers. Now, my
grandma, who the book is dedicated to, is very fascinated by this subject of collaborative
consumption and it's funny cause she really gets the heart of the book; she really gets
the community aspect. Although, she gets a little lost when we start talking about real
time technologies and augmented reality. So anyway, I was last back in London and she
asked me to show her the power of this matchmaking. So I went onto eBay and I said to her, "What
do you want?" And she said, "I want a pearl, silver-rimmed picture frame for your wedding
photo." So, online I went and found one within two seconds and so the seller was called moocowmeadows.
So she said, "Well, how can I trust someone called moocowmeadows?" And I said, "Well,
you just do." And then she said, "What, I'm gonna pay for it and I can't actually physically
inspect the item?" And I said, "Yes." And then she said, "And then we're gonna pay for
it before it's actually shipped?" And I said, "Yeah." She said, "Well, how do I trust this
person?" So then I started to explain to her well, 98 percent of trades on eBay receive
a positive rating and the two percent negative rating, it's relatively minor reasons, like
the item arrives one week later than expected. "Ok," she says, "let's order the item." So,
we then got into this conversation about reputation systems, right? Now, eBay has proven something
incredibly powerful, which is that the trust we form face-to-face can now be replicated
online through points, feedback, power sellers and Roo and I noticed that these two principles
that eBay had proven on steroids, trust and efficiency were enabling us to mimic the exchanges
that used to take place in villages, but in ways and on a scale that had never been possible
before. So, in other words, technology was actually taking us back to really old market
behaviors. So, we're swapping and sharing and bartering and trading, but they're being
reinvented into cooler and dynamic forms that are relevant for the Facebook age. We call
this groundswell collaborative consumption and we believe it's a new culture and economy
that reinventing not just what we consume, but how we consume. So, a few years ago we
started to notice the massive surgance in car sharing and bike sharing and peer to peer
rental markets and Etsy labs and food co-ops, and we started to wonder whether all these
things were linked and interconnected. And what we believe is that we are sharing and
collaborating again in ways actually more hip than hippie and keeping up with the Jones's
is being replaced by sharing with the Jones's. I was reading The New York Times, I like to
go back and look at articles that really influenced me and there was a great quote where it said,
"Sharing is to the iPod what the 8-track is to, sorry, sharing is to the iPod, sharing
is to ownership what the iPod is to the 8-track, what the solar panel is to the coal mine."
In other words, sharing is post-modern and cool and ownership is becoming dull and backwards.
Now, when we started writing the book, we had around 500 examples of collaborative consumption
and now we actually have over five thousand from all corners of the world. And as we dug
deeper, we actually realized that they could be organized into three clear systems. So
the first is called redistribution markets. So, to tell you the power of redistribution
markets, about four years ago I bought a bread making machine. Now, hands up here, it's predominantly
men, but maybe some of you know Nigella Lawson. Does anyone know? Oh, sweet, yes, Nigella
Bites. So, Nigella often appears on the TV screen looking like this. It's the middle
of the night, right? And she feels like making cakes and there she appears, fully made up
and she becomes somewhat of this domestic goddess, right? So, at the time, I was doing
a lot of travelling and I happened to be on a plane where Nigella declared that every
woman needed a bread making machine to fill up our homes with these warm and comforting
smells of freshly baked bread. And I thought, "Wow. This is all I needed to be a domestic
goddess?" So, I bought this bread making machine. Now, bread making machines are huge. I don't
know if you've seen them, but they actually occupy probably half of a New York kitchen.
And I used this bread making machine just once, but the weird thing was I actually felt
this strange sense of relief when I finally got rid of the thing. I had fallen in to the
common consumer trap of buying not what I needed, but I thought I needed or what I desired
or what I thought I should be. I was trying to keep up with the Jones's. Now, this problem
is huge. Consumerism has actually become all-consuming and I wanna give you a couple of steps to
support this point. Our houses are stuffed with ice cream makers, electronic gadgets,
foot spas, chocolate fondue fountains and my latest spotting, a strawberry slicer. I
mean, was life complete before the strawberry slicer came along? So, 80% of the stuff we
own, we use less than once a month. Just think about that. Eighty percent of the stuff you
own you lose-, use less than once a month. The second thing is there actually 53 thousand
personal self-storage units in the United States alone. That's seven times the amount
of Starbucks. Now, this is crazy. Like we don't have enough room in our houses for all
this stuff, so we start renting and paying for self-storage units? And when you think
about it, waste and storage are two end games of the same problem; we have too much stuff.
And this is where redistribution markets come in. You've got examples like Freecycle, where
people give stuff away, you've got examples like swap.com that Daniel mentioned, or Thread
Up, a kid's clothing exchange, where people exchanging things for equal value. And then,
of course, you've got reuse market places where people are actually making money. eBay
actually just estimated that the worth, the estimated worth of the secondary goods market
is 500 billion dollars. So, it's a huge, whitespace of opportunity. Redistribution markets also
have massive environmental benefits because reduce, reuse, recycle, repair, redistribute
what they are doing is stretching the lifecycle of a product. In other words, they reduce
the amount of stuff that end up in landfill. The second system is what we call collaborative
lifestyles. So, hands up, how many of you have heard of co-working or social lending
or peer to peer travel? Most of you, right. Ok. These are all examples of collaborative
lifestyles because it's not just stuff that can be shared; its spaces, parking spaces,
gardens, time, skills, assets that are intangible. And the reason why it's so easy to share this
stuff is because we've wired our world to share and we can share within our neighborhoods,
our offices, or our Facebook network. But to give you two examples of collaborative
lifestyles, I personally really like, the first is social lending. Now, the easiest
way to explain social lending is Roo has a hundred dollars to lend and I want to borrow
a hundred dollars and it matches us together, although it doesn't have to be a direct exchange.
And there's some huge marketplaces emerging like Zopur in the UK and Lending Club in the
US. Now, social lending increased by 800% last year. Now, I can't think of a traditional
bank that increased by 800%. Now, Lending Club did around 11 million dollars worth of
loans last year and their expected to become ten% the personal loans market. So, if I was
someone like Bank of America or Commonwealth Bank, I'd start getting worried about social
lending, that they were actually gonna start eating into our margin. But the thing that's
so fascinating about social lending is that for default rate is really low at 0.64%. Now,
credit cards are around 8% and the traditional bank is around 5%. Now, in our research, we
discovered that the reason why it is so low is that people said, "I trust my peer. I feel
more accountable to my peer than I do with any kind of big bank." This is really interesting.
The second is another example of a collaborative lifestyle, is called Landshare in the UK.
Now, Landshare, there's similar ones in the US called Sharing Backyards or sharedearth.com.
It's like a garden dating agency. So, what it does is it takes Mr. Jones with some spare
back garden space and Mr. Smith, a would-be grower, and it matches them and together,
they grow their own food. There's been over 55 thousand matches in the UK so far and it's
one of those ideas that's so simple, yet brilliant, you wonder why it's never been done before.
My dad is actually participating in Landshare and the funny thing is it's actually not about
the food, right? He has all these kids come round to his neighborhood and grow tomatoes
and the first time, in 18 years that he's lived in Hampshire Garden suburb, he actually
knows his neighbors names. So, I think it's really interesting that what's happening is
its part of this OTO, offline, online to offline trend, where people are forming connections
through technology that leads to very powerful community and human relationships in the real
world. The last system is what we call product service systems, ok? So, have any of you been
to London or Washington or Denver or Minneapolis or Paris, recently, you've seen a lot of people
cycling around on bikes. But they're not on their own bikes, they're on magic bikes that
are there when you want them and gone when you don't. Now, bike sharing is actually the
fastest growing form of transportation in the world and it's a great example of a product
service system, whereby you pay the benefit of a product, what it does for you, without
needing to own the product outright. Now, product service systems are absolutely ideal
when products have, what we call, high idling capacity. So, high idling capacity refers
to unused or untapped value, of a good. So a car that sits idle for 23 hours a day, the
evening dress that you wear once and that sits in your wardrobe has high idling capacity.
Now one of my favorite metaphors for this is who owns a power drill? Wow. A lot of men,
so around 80% of the room own a power drill. Actually, half of all households in the US
own a power drill. Now that power drill will be used between 12 to 13 minutes in its entire
lifetime. Now, when you think about it, it's really crazy. You're laughing, but it is crazy
because what you need is the hole, not actually the drill, and that's a great example of the
shift in mindset about a whole generation of people growing up saying, "Hang on a minute.
I want the benefit of that product and I can access that through different ways." Peer
to peer rentals, such as Zilok, is a great example. Now product service systems have
actually been around for years. Just think of libraries or laundress, but we believe
that we're entering a new era of supercharged appeal for two reasons. One, we now have the
technology to make sharing frictionless, convenient and fun. And two, our relationship to satisfy
what we want is far less material than any previous generation. I don't want CDs. I want
the music it plays. I don't want videos; I want the movie it carries. I don't want an
answering machine, I want the message it saves. In other words, we don't want stuff; we want
the needs or experiences it fulfills. So, we're entering an era where access is better
than ownership, as Kevin Kelly puts it, or where usage trumps possession. Now, these
three systems are fusing together and creating a dotted line between what's mine, what's
yours and what's ours. I thought you guys might actually appreciate that there's someone
in Parsons, it's a magic things starting to happen around collaborative consumption, where
it's becoming a movement, which was always our intent. And we get sent all these wonderful
things from all around the world of people making videos, someone sent me a jewelry collection
she's made, inspired by the things that we're saying, which is a little weird, but lovely
as well. And some students at Parsons had actually started to use Google Maps to map
all the examples of collaborative consumption by the systems in New York City. So, I'll
send this link to you, but it's pretty cool, the things that they're starting to do. And
this student actually wants to open it up to the rest of the world to create a world
map of collaborative consumption examples. So, how big is this thing? Is it a niche,
or is it a trend or is it really a groundswell that we talk about? So, we've made this little
video that's gonna load and work to show you just how big it really is. And hopefully,
it will work.
[electronic music] [video plays for 2:23 minutes]
So, it's pretty big and it's during its nascent stages. So, just like to now talk about why
we think its emerging now and I hate this word, cause its cliché, but it's actually
a perfect storm of four key drivers. Now the first is two big global contextual facets,
pressing on unresolved environmental concerns and a global recession that has fundamentally
shocked consumer behaviors. Now, I don't like to talk about it being frugal, because I think
what's actually happening is that we are seeing a questioning of the health of the consumer
system in a way that we've never seen before. I mean, if you look at the number of articles
coming out around happiness and fulfillment and satisfaction, this is all connected to
does consumerism make you happy? Thomas Freedman, who is one of my favorite columnists, wrote
something which I thought summed up nicely, he said, "2008 was when we hit a wall when
Mother Nature and the market both said, 'No more.'" Now, we know that a system that's
based on selling more and more stuff is an environmental and economic Ponzi scheme, yet
it's really difficult for us to figure out what we individually should do. Now, our hypothesis
is that as the consumer system got bigger, it pushed us further and further apart, but
now that it broke, it's actually snapped and it's pushing us back together. All around
us we're seeing an resurgence around the belief in community, both in the virtual and the
real worlds. Volunteering makes it through the roof, bike sales have never been higher,
cooking and sewing classes are doing a roaring trade. And as you saw in that video, there's
now one thousand more farmers markets than there are Wal-Mart's in the United States.
Now, Facebook recently hit 500 million users and we actually think that Facebook and farmers
markets have a lot in common with each other because all around us, we're seeking to be
a part of communities of people with shared interest. We're working to feed our social
self, the side of us that seeks connection and belonging. We've gotten really good at
consuming; buying and consuming more. But we're actually born and bred to share and
cooperate and we were doing so for thousands of years, whether we hunted in packs or farmed
in cooperatives. But now sharing is back with this ubiquitous force that we call the peer
to peer revolution and we're growing up sharing files and videos and knowledge and now these
behaviors are extending into other areas of our lives. And this is driving a massive cultural
shift from Generation Me to Generation We. Clay Shirky, who I'm sure you're all familiar
with and should read his book called Cognitive Surplus. He put it brilliantly when he said,
"We're monkeys with Internet access." I think it's happening so fast because these behaviors
are very innate to us, but now we have the infrastructure to share and collaborate in
ways that have never been possible before. So, these four drivers are fusing together
to create the big shift away from the 20th century defined by hyper-consumption, towards
the 21st century; an era of collaborative consumption. We believe it's a new era of
consumerism defined by access over ownership, the primacy of experience over more stuff
and trust between strangers. So, just to wrap, I wanna come back to the cornerstone of this
new culture economy, which is trust or reputation. Because it doesn't matter if you're sharing
your car, sharing your back garden or swapping a good, they all involve different degrees
of trust. And the way we look at it is that it actually can be put out on a spectrum.
So you've got companies emerging that actually revolve around this centralized trust system,
so Zipcar is a great example of this. Zipcar still controls an inventory of cars, so it's
a fairly controlled system of trust. You've then got a whole breed of marketplaces which
are enabling trust between strangers so, swap.com is a great example of that where you're trading
peer-to-peer, but you still feel the presence of the company. And then you've got really
open systems of trust where it truly is peer place and the organization of the company
completely disappears. So, Couchsurfing is a great example of that, or Freecycle, or
even Craigslist; that's really Craig Newmark's intent. And it's so fascinating how this principle
of trust between strangers is changing marketplaces. Now, how many of you would hitchhike? Zero.
Maybe one, maybe.
>>male member #1: [inaudible].
>>Rachel: Not recently, right. Ok. So, what about, would you share a ride with someone
from your old college? Hands up. Yeah. What about someone from this room, someone you
work with? Everyone, right? So, the circle of trust, your relationship to hitchhiking
changed, changes when it becomes ride sharing. Now, what Zimride does is its integration
with Facebook means that it can change your relationship to the person that you're sharing
a car with. So, it does the usual things by saying which university you went to or which
workplace you belong to, but then it actually gets into personal preferences that enables
you to figure out who's gonna be in the car. Do they smoke? Are they a chatterbox? What
do they listen to on the radio? Do they like to eat in the car? So, what these systems
are actually doing is helping you get a very complete picture of not just whether you can
trust this person, but also whether you'd like to share a ride with them as well. And
so, what's happening here is it's actually community plus technology, totally reinventing
a very old idea of carpooling. The other example that we love is called Thread Up, I mentioned,
which is the clothing exchange for kids clothing. By the time a child 18, it's estimated that
we would have spent 20 thousand dollars on kid's clothes and retired three thousand items.
Now, anyone who has a child knows that they grow out of them every three months, so the
clothes are actually pretty new. Now, what Thread Up realized was that they problem with
most used car-, used car marketplace, used clothes marketplaces is that Mums and Dads
are very worried about cleanliness and quality. They will swap stuff if they believe that
stuff is gonna be clean and high quality. So what they're doing is actually using reputation
systems, and this may look at you a little bit like Foursquare and Badges to reinforce
the behaviors that they're looking for. And I see things like this as a nice example of
competitive collaboration, where you actually, you want to be top of the leader board, so
it motivates the good behaviors. Now, what happens on Thread Up is if you start to reach
the most stylish of a superswapper, you can actually start trading in better currencies.
And this is a really great example of where reputation is starting to become a currency.
We actually believe that reputation could become more powerful than your credit history.
And it's only a matter of time before the reputation trail that we leave across communities,
both in YouTube and Flickr, and also in examples that we have shown, will be aggregated to
form a score that would determine your access to these communities. So, just to wrap, this
is a nice way of summarizing what we've been talking about. We believe that if the 20th
century was defined by credit and advertising and individual ownership and was called hyper-consumption,
the 21st century will be defined by reputation, community and shared access and will be called
collaborative consumption. It's funny, consumerism seems like an immovable fact of life, but
it's not. It's actually a very new, modern construct that was actually just invented
in the last 60 to 70 years, and we actually believe that we're a turning point and that
we'll see this period as a time where society started to wake up from this humungous hangover
of emptiness and waste, and started to reinvent the meaning of more. And we're so excited
by collaborative consumption, not just from a social and an environmental perspective,
but also from a business perspective because we now believe that we have the technologies
to reinvent outdated modes of business, leapfrog over wasteful forms of consumerism and help
us lead healthier and more fulfilling lives. Thank you very much.
[applause]