Jeremiah Owyang

What Companies Must Do When Customers Share –Rather Than Buy

The Official SlideShare on the Collaborative Economy

Jeremiah OwyangIndustry Analyst

Jeremiah Owyang

Why is the crowd becoming more powerful than companies?

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How much will it hurt when the crowd doesn’t need to buy from companies?

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What should a company do to respond and stay profitable?

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Why embrace a Collaborative Economy?

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Let’s look at the past to see where we’re going

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The First Era: A few people could publish on the internet

Source: Altimeter Group, the Collaborative Economy Report, 2013

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Few of uscan publish,

I talk, and you listen.

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The Second Era: Anyone can publish using social tools

Source: Altimeter Group, the Collaborative Economy Report, 2013

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Hmmm.I’ve lost

media power.

We canspeak our minds,

and heartrusted opinions.

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The Third Era: Using same social tools people share products

Source: Altimeter Group, the Collaborative Economy Report, 2013

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Using these social sharing sites, I can easily get products and services

I can get goods at no cost from friends. I don’t need to shop

at companies.

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They stolemy cheese.

*Sniffle*

What role do corporations play if people don’t need them?

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The first instinct is for companies to fight it

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But they don’t have to fight –they can join

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Ownership and access is shared between corporations, startups and people. The Collaborative Economy.

An Opportunity: A New Economic Model

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The only way, is to let go to gain more.

For companies to succeed in the collaborative economy

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Question: Is this a business disruption?

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Sharing is not new, our Moms taught us to do it!

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But now, people can use technology to do it at a scale without boundaries

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Imagine you’re going on a business trip

And you can tap the crowd to get what you need—without buying from companies

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Transportation

Use another person’s car–instead of a taxi corporation.

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Lyft enables crowd to be transportation –avoiding taxis

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Hospitality

…use AirBnb and stay at someone’s house–rather than a hotel.

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AirBnb enables crowd to be a hotel

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Funding

…use peer lending websites to borrow money from the crowd–rather than go to a bank.

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LendingClub enables crowd to be a bank

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Staffing

…hire people from the crowd–rather than working with traditional staffing agencies or HR.

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oDesk enables crowd to be a workforce

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Facilities

…rent office space from other companies that have extra space–rather than work with a traditional property manager.

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LiquidSpace enables companies to rent from each other

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Food and beverage

…enjoy a home cooked meal from someone’s home kitchen—rather than eat at a restaurant.

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Feastly enables your neighbors’ kitchens to be a restaurant

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Goods and products

…get goods and products from the crowd at no cost for our office and home–rather than buying at a store.

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Yerdle enables neighbors to gift goods–rather than buy

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The impact of sharing can be quite severe

Customers can buy once –and share many times amongst each other–reducing the need to buy again.

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A properly shared car is…

$270,000Lost Revenueof Auto Sales

(1 shared car = 9 cars at average of $30k each.)

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What’s causing this? Three major factors.

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Societal factors: Access is more important than ownership

• Younger generation, or saddled by debt, are realizing access to goods is better than owning them.

• Population density and many global cultures are accustomed to sharing.

• It means, people don’t need to buy and own things to get what they need.

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Economic factors: Activate idle resources

• As population grows, earth’s resources stay fixed.

• It means that: “it pays to buy quality, especially when we can re-use or resell to others.”

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Technology enables easy sharing globally and locally

• 87 phones per 100 people on planet

• Three quarters of startups use social tech like Facebook

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Venture Investors fuel this movement –these startups won’t go away in near time.

Out of 200 collaborative economy startups, total funding was over $2 billion

Of those funded, the average was $28 million (May 2013, Lyft raised $60m)

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The sharing revolution isan unstoppable movement*

*Caveat: The only way to stop this movement, is to stop the internet.

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What can companies do when they’ve lost power to the crowd?

There is a solution

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Collaborative Economy: Value Chain

The key is to change the way we think:

• Products become services

• Services become marketplaces

• Marketplaces build your products

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1) Company as a Service

• Products become services

• Customers want access to products, but may not want to own them

• Companies must change the relationship and offer

• Renting• subscribing• or event lending.

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Company as a service isn’t new!

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Reality: Toyota and BMW rent cars, as a service

• For companies that have high durable goods, unattainable luxuries, idle inventories, or high consideration purchases, allow them to now be a service.

• Example: Toyota and BMW now rent cars from their dealership in SF bay area.

• To get ahead of changing consumer needs, Toyota and BMW are now services.

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Dollar Shave Club offers razors as a service

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Peugeot offers Mobility as a service–even renting vans, cars, buses, and bikes

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2) Motivate a Markeplace

• Shift services to become a marketplace

• Motivating a marketplace is specific. You can’t own the marketplace, you can’t manage it, you simply must help usher them along. In this use case, the goal is to get the people to do these actions among themselves.

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Shifting services to become a marketplace

• If your company offers services, like a hospitality company serves guests, then learn how to tap into the marketplaces that are already forming in the sharing economy.

• There are a number of new activities that people can perform, including resell, co-own, swap goods, lend to each other, or gifting.

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Motivate a Market

• People are bypassing hotels to stay at unique experiences, using websites like Airbnb.

• Example: Rather than stand by the wayside, Lewis discovered a new market opportunity for his guest room to be certified as Marriott certified.

• A large brand brings TRUST.

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Motivate a Market

• Marriot would then funnel trusted guests, perhaps from a loyalty program, and even offer maid, food, or concierge services.

• Everyone wins: Lewis gets a trusted guest, the guest gets a local experience at a certified home, and Marriot gets a cut of the transactions –that they would have missed out on completely.

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ScotteVest enables second market

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Patagonia enables second market and altruism

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3) Collaborative Economy: Value Chain

• In this third phase, companies who have marketplaces, must activate them to build their future products.

• We call this “provide a platform.” It means that companies must empower their crowds to build future products and services.

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Provide a Platform

This is the hardest level –but yields the most benefits.

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Collaboration

Many startups are already collaborating with users:

-Ideation sites like UserVoice co-ideate new products

-Kickststarter co-funds new ideas

-Quickly co-builds new products

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Imagine if collaboration was extended to:

• Co Funding

• Co Ideation

• Co Creation

• Co Distribution

• Co Marketing

• Co Selling

• Co Revenue

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Co-Fund new products like Kickstarter

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Co-Design products like Nike

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Co-Develop like Quirkly

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Co-Customize like Etsy

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Co-Produce with 3D Printers

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Co-Storage of Products with Lockitron

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Co-Deliver with Deliv

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A crowd built a car: Wikispeed

Community led project that:

Is crowd co-funded, co-designed, and co-built a working 100MPG car.

The crowd designs components, 3D prints them, and mails them to central location for assembly.

Car is being sold at $25K per auto.

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Collaboration

It may be hard to tell the difference between employees and customers as new products are built from the crowd.

But the costs of building are leveraged by the crowd, reducing the costs of the company.

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Radical –but Efficient: The Crowd Becomes the Company

In this future state, the crowd will efficiently fulfill nearly all corporate functions.

The only thing remaining,could be ecommerce software and a logo!

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Collaborative Economy: Value Chain

• The advanced company will deploy all three strategies.

• Startups that partner with corporations have opportunities that others don’t.

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What will challenge us as wemove forward?

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Opposing Market Forces Abound

1. Corporate mindset wants to hold onto control –and revenue models

2. Many governments, lobbyists, and institutions oppose

3. Fragmented startup scene creates confusion

4. Excess of startups creates uncertainty on which will last

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What are your benefits for letting go to the collaborative economy?

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More efficient, as the crowd helps you

1

2 A long-term relationship with your vested customers

3 New value created between people, means new revenues

4 If you act now, you will have first mover advantage

Benefits to letting go

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Collaborative Goal: Activate the market around you

Opportunity – Harness new business transactions that you were missing out on.

Take 20% cut from every market transaction.

Sell new value-added services.

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To gain this new economy and market, you must leap across, leaving behind old business models

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The Collaborative Economy

Jeremiah OwyangIndustry Analyst@jowyang

web-strategist.comowyang.jeremiah@gmail.com

Re-imagineYour presentationsinfo@reximedia.com925-406-0921