The Sharing Economy
Robin Chase founder of Buzzcar and former CEO of Zipcar, the world's largest car sharing organization, has been on the leading edge of the so-called sharing economy.
By Green Builder Staff
GB: Can you talk a little more about organizational structures as they pertain to what’s being called the sharing or collaborative economy?
RC: Sure. I’d like to start with a curious part of the collaborative and sharing economy—something called “bed sharing.” I’m hoping that right now you’re wondering what bed-sharing is all about. Think about when we go to peoples’ houses, for Thanksgiving or Christmas or on business trips, and stay in their spare bedrooms. If we’re lucky, we’ll have a nice, clean bedroom, and if we’re really lucky, they’ll have a double bed in their spare bedroom—and I joke that if we’re not lucky at all, we’ll end up in the teenager’s bedroom.
RC: But as I’ve been thinking about this, isn’t this why we invented hotels and motels, which are, in fact, bed sharing? And when I started Zipcar, my staff wanted to call it “car sharing.” But at that time, “car sharing” didn’t really have a meaning. No one except transportation policy-people knew what it meant. And I would say to my staff, “Imagine if we called hotels ‘bed sharing.’” What would that feel like? It gives you a totally different idea to how you feel when you’re sleeping in that bed. The Intercontinental Hotel Group was the largest hotel chain in the world, and it’s been around for about 60 years. It has 645,000 rooms in 4,400 hotels, in a hundred countries.
GB: That’s impressive.
RC: But what if I told you that it’s no longer the largest one? The new largest one is just four years old. It’s called Airbnb, and it’s basically a Web site where I can advertise the spare bedroom in my own house, or my second house or apartment, and make it available for people to come stay—very much like a hotel. In four years, they’ve managed to gather 650,000 rooms in 192 countries. And there’s one that’s even larger than this, and that’s Couchsurfing. Couchsurfing doesn’t have money exchanging hands, but it’s one where individuals let strangers stay on their couches or in their spare bedrooms. They’re eight years old, and have 1.5 million rooms available for people to stay at or rent.
GB: Why is this happening now?
GS: People now see themselves not only as consumers, but as producers. Companies such as YouTube and Facebook, where you publish your own content, have really transformed our lives. In a way, all of these companies are really dealing in excess capacity on platforms for participation.
GB: Can you explain that a bit more?
RC: It’s a partnership between individuals and companies, where each brings the best of what it has to offer. The incorporated side, the companies, brings all the things that companies do really well. They can deliver economies of scale and bulk pricing, for example.
GB: What do individuals add to the mix?
RC: They provide the things that are really expensive and difficult for companies to bring—prime among them is diversity.
GB: And this arrangement could save both energy and other resources, I would think.
RC: Absolutely. Carpooling.com is a ride-sharing company, so think of all the excess seats around you as you go on a trip. It’s German, and it’s 10 years old. Every month, it moves a million passengers—which is the same as 2,500 high-speed trains. And they didn’t have to lay a track or buy a train. Buzzcar is the company I founded, which is car sharing. Individuals can rent out their own car to their friends and neighbors.
GB: What has been the biggest challenge with the founding of Buzzcar?
RC: Insurance. In France, Buzzcar had to get insurance that protected the individual car owner and made it so that the driver could drive safely without a huge deductible. This took a year to do. This is what I mean by companies being able to do what individuals can’t do. We built the Web site, we created the reservation technology, and we also provided a consistent contract between the owners and drivers. We’re about 15 months old in France, and in those 15 months we’ve had about 12,000 people sign up to drive with 1,700 cars whose owners have made them available to rent all across France.
GB: So people are open to sharing their cars, at least in France. Will they do it here?
RC: What we’re finding, generally, is that people don’t feel the need so much to own the asset. What they really want is the use of the asset. We’re moving from an ownership economy to a use economy.
GB: But isn’t it asking people to make sacrifices?
RC: On the contrary, there are some nice, unintended benefits when you share rather than own. Zipcar has 11,000 cars parked across North America and a couple of countries in Europe. What it means is that instead of me, Robin Chase, owning my one car that’s parked downstairs, I have access to this fleet across the world. I can pick the car that suits each individual trip I’m taking. Do I need a pick-up truck, a van, a small car, a big car?
GB: What was Zipcar’s secret? How did it get a foothold?
RC: I think it’s the magic of well-applied technology that was transforming. Zipcar’s technology made renting and using a rental car as easy and convenient as using your own car. It takes about 30 seconds, and you make a reservation for a specific car that’s in your neighborhood for a certain amount of time. These cars are parked throughout the dense metropolitan areas. There are 50 million people that are within a five-minute walk of a Zipcar.
GB: How do Zipcar or Buzzcar know a driver is safe—and avoid legal trouble?
RC: Zipcar does a background driving check to make sure you haven’t had any car accidents in the last three years and have a good record. That’s what Buzzcar does today from the side of the driver. I know that they have a good driving record. As for the car—with Zipcar, all the cars are new, and the company maintains them. For Buzzcar, we have ratings and commentaries for both the individual drivers and the owners.
GB: It seems like a person who works at home must be an ideal candidate for car sharing.
RC: That’s actually the target market for car sharing—people who don’t need a car to get to work. If you need a car to get to work, you’re going to be spending that $9,000 a year on average, in America, to do that. The numbers are really phenomenal, and now I have to say them quite carefully. If you assume that the shared cars are well used, say 30-50 percent of the time, those cars replace 15-20 private cars because each car is used by 40 to 60 people. About 40 percent of people who use them decide they don’t have to buy a car or can sell their car. So, for each one of those cars, they’ve taken 15 to 20 off the street. More importantly, those renters are driving the cars 80 percent less than they would if they owned a vehicle.
GB: We’ve talked a lot about transportation. How do you see the shared economy affecting the the building sector?
RC: I think it will have an increasingly large impact. Think about office space. If we think of the same parallel with how much I use my car, for many companies, that’s how much your employees are using their office space. Now, instead of each person having their own assigned desk, they may have their stuff in a cubby or a little mini-locker that they bring with them to the open space, and when they come in they choose a desk or an office.
GB: Can you give examples related to housing?
RC: Think about parking. In Paris, where I was living, the parking vacancy rate is 70 percent, and why is that? Because Paris has beautiful buildings that didn’t come with parking to begin with. Then, from the 1960s through the 1990s, all new construction was mandated to have parking spaces built underneath those new buildings. But half of the people who live in those buildings don’t have cars. So there’s all this parking that’s vacant, but no one can get at it, because it has entryways that require card access. When we build parking—which is increasingly disappearing—we need to build it so it’s 1) accessible to others, and 2) can be turned into something else in some future life.
GB: Building owners and the trades could get behind that idea. But often it’s the code or a city ordinance that you have to have X number of parking spaces.
RC: You are completely correct. But city after city is changing those codes to say things like “we’ll let the market decide” or simply removing the parking minimum. I do see it as a transitional battle. I also know that neighbors are another real problem. And I want to say that 30 years ago, I was one of those complaining neighbors. I would say, “Yeah, you’re building this big building and I know it’s going to have people who live there and they’re going to be parking on-street and that’s going to take away my free, easy parking on street.”
GB: It’s complicated.
RC: Yes, but I have this fantasy—and I admit it’s a fantasy: Wouldn’t it be great if we could have building codes and zoning codes that planned to evolve over time—that when we go from a town that has 20 humans per square mile to having 50, 100 or 10,000—that the rules change as density increases?
Can we write laws that recognize the changing space of a neighborhood, and stop building things in those neighborhoods that nobody wants?
GB: What you’re talking about is making flexible buildings. And when they’re empty for a while, there’s revenue potential.
RC: Yes, there’s rent.
GB: Can you go into a little more detail about that?
RC:I urge everyone to think about the buildings they’ve built or are building. Where is the excess capacity, and how can you make it shareable? If we thought of buildings—and the number of rooms that are idle—how can we build it so that people have access? It becomes another revenue stream for you. I know it’s nerve wracking for owners, because they would rather have someone signing a lease for five years than renting the rooms by the day. But in many, many cases, the long-term lease ends up not happening, so we have all this idle space. If people want to have smaller spaces or smaller periods of time, we should make that accessible to them.
GB: This idea of sharing of excess resources seems to be still taking shape. It’s very much in motion.
RC: It is in motion, and I would really urge people to think about excess capacity, and think about it from a time perspective, from a physical perspective—and not just hard assets—their staff, their systems, their know-how. How can they get more out of that asset? How can they get a bigger return on that investment, by tapping into that excess capacity?
In The Zero Marginal Cost Society, New York Times bestselling author Jeremy Rifkin describes how the emerging Internet of Things is speeding us to an era of nearly free goods and services, precipitating the meteoric rise of a global Collaborative Commons and the eclipse of capitalism.