3 Rules For Building A Collaborative Consumption Business

The cofounder of Zimride talks about the keys to building a business that hinges on experience instead of ownership.

Five years ago, I was sitting in a college lecture when I heard a frustrating stat: 80% of seats in cars are unoccupied during travel. Even today, the U.S. sees 2.3 billion long-distance car trips a year running at only 20% efficiency.

This piece is part of a Collaborative Fund-curated series on creativity and values written by thought leaders in the for-profit, for-good business space.

Filling those seats has enormous potential to improve the economy, the environment, and our overall well-being. Though we’re just starting to understand the macro effects of this single-occupancy lifestyle, many startups have gained traction attempting to solve U.S. transportation’s myriad flaws. The alternative to innovating is bleak: Traffic leads to 16 million hours of lost productivity in this country every day, which accounts to a staggering $80 billion annual cost to the economy. And this cost is expected to double by 2050.

Why have we accepted such a low "occupancy" rate on our highways? Especially considering transportation is the second highest household expense in America, with $8,000 going towards owning a car. The transportation sector is the second largest source of carbon emissions in the U.S., accounting for 27% of total emissions. Once the numbers are crunched and we think about their implications on natural resources, it’s no wonder that an incredible number of ride and carsharing businesses have cropped up in the last five years, attempting to solve—and profit from—this major inefficiency.


 
In 2008, my friend Logan Green and I saw major potential for college campuses to be an entry-point into promoting transportation innovation. We quickly conceived what would become Zimride, a social rideshare website that harnessed the social networks of existing college networks and Facebook profiles. The platform focused on facilitating 50 to 500 mile travel, making it easy for drivers to easily get paid for the extra seats in their cars. Passengers book seats online with a credit card just as they would for a trip by plane, bus, or train.
 
A few years later, and several thousands of rides shared, we came up with a few lessons on building transportation businesses that hinge on people’s experiences (like sharing a ride) over ownership (like buying a new car). 

Build collaborative infrastructures

Build platforms that encourage community, trust, and credibility between peers. This is key for any collaborative consumption-based startup. The solution to transportation inefficiencies lies at the intersection of collaborative consumption and the social graph: Shifting transportation from ownership to access. My vision for the future of social transportation is one that places more value on information and community over a physical product. Move over multi-billion-dollar high-speed rail infrastructure and welcome social information-based solutions.

Promote access over ownership

recent study on shifting attitudes of car ownership in Germany concluded that three quarters of 18 to 25-year-olds, would rather live without their car than their smartphone. The independence once represented by the car has been replaced by cell phones and social networks, which are now at the forefront of people’s expression of freedom and access. Once a symbol of "coming of age," many drivers are waiting longer to get their licenses. Car ownership, especially in congested cities is increasingly perceived as a burden, no longer associated with freedom and personal identity as it once was.

The infrastructure for transportation’s future is rapidly coming of age. Just this past month, I hailed a yellow cab with Cabulous (a taxi hailing mobile app), requested an Uber (an on-demand black car service mobile app) when I couldn’t find a cab, ran a few errands with car-sharing leader Zipcar, and took a few Zimrides (rideshare social network). All my choices were largely made based on convenience and cost.

Nurture communities

Through social, location, and mobile technologies (SoLoMo) we now have the ability to leverage our virtual communities into the physical world, to bring our online experiences offline. Take the new "social paring" initiative announced by Ticketmaster that gives you the ability to see who is sitting near you at a concert as a great example of this growing trend.

The collaborative consumption revolution is not just about changing trends in ownership and independence, but also about the importance of building community.  In the future, I hope, our transportation will bring us closer together.

With the knowledge that the SoLoMo movement is just getting started, let’s imagine cities connected, not by off-ramps or elevated highways, but by tight social networks of people traveling and spending time together. The next time you’re stuck in traffic, look around at all the empty seats around you. Imagine them filled with your friends, interesting new acquaintances, and people building communities rather than just moving between them. 

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8 Comments

  • Jack Holt

    Well, I obviously think it's a fantastic idea (given the Whit.li API) but interested to hear your take on how and when the Avis and Hertz crowd are going to react?

    Jack

  • Emilie McDonough

    I've been following the collaborative consumption movement with great interest over the past year or so and am amazed at how fast the P2P rental sector has grown. There are so many impressive companies out there (Airbnb, TaskRabbit, Fun2Rent, etc) connecting owners of goods with interested renters. I'm excited to see how this sector evolves! 

  • chrisco

    Great article and market facts. This space, whatever it is called, is going to be huge. Speaking of the name of the space, "Collaborative Consumption" is pretty horrendous, IMHO. Let's look at the words:

    "Collaborative": A five-syllable word that doesn't exactly roll off the tongue. Definition: "To work jointly with others or together especially in an intellectual endeavor" (http://www.merriam-webster.com....

    ""Consumption": A three-syllable word that doesn't have particularly nice, "green" or personable connotations (the concept of using resources more efficiently by sharing should have different/better connotations). Definition: "The act or process of consuming resources" (http://www.merriam-webster.com....

    The whole trend is about "sharing," not "consuming." And sharing already implies collaboration, so the word "collaboration" can be removed if the word "consumption" is changed.

    Besides the meaning of the words, we are talking about eight syllables spread over over two words. Not nice!. Plus, both words start with the same letter of the alphabet, which doesn't make for a particularly pleasant, at least when we are talking about "k"-like sounds).

    One idea for better term and word choice:

    "Person-to-Person Marketplace"

    Why that? Well, we have "Business-to-Business" (B2B) and "Business-to-Consumer" (B2C). Why not "Person-to-Person" (P2P)? Isn't that what we are talking about here? A person-to-person marketplace? A place where individuals meet and trade in a marketplace?  You know, person-to-person and all?!

    Cheers!

    PS: Yes, the term "Peer-to-Peer Network" (P2P) exists, but so what? We have a gazillion words and acronyms in the English language that are spelled the same and have different meaning. Pretty much nobody except school children, people new to the English language, and "haters" (but we we ignore them / leave them to their miserable selves) have any difficulty with that, and then only briefly, at least if they are of average or above intelligence.