The great exchange

“Neither a borrower nor a lender be,” goes the famous line from Hamlet. But champions of the sharing economy obviously don’t agree.

For Muneeb Mushtaq and his brother Nabeel, it all started with a leaky faucet. It was January 2012 and their mother was contending with a stubborn drip under the kitchen sink in the family’s Mississauga, Ont., home. The brothers took to the Internet, thinking a simple search would yield the plumber they needed. But it was anything but simple. “We sifted through so many listings, [but they were] pretty much all the same companies,” Muneeb says. “We eventually hired a plumber who ended up overcharging us and did a pretty bad job. And there was no way of holding [him] accountable.” The brothers — who at the time were both completing their undergraduate education — saw in this negative experience the chance to solve a broader problem. And AskforTask was born.

The service, which the Mushtaq brothers founded a few months later, pegs itself as Canada’s first online marketplace for on-demand errands and home-care services. “If you need a cleaner, or a handyman, or a plumber, you can go to the AskforTask app, specify where you want someone to come in, what time, how many hours and what you need them for.” The app then creates a “task,” which is broadcast to a network of local service providers who have signed up. “If they like what they see, they’ll accept it, you’ll get matched and they’ll come and do the job for you,” Muneeb explains.

Since launching, AskforTask has spread to 10 Canadian cities and garnered almost half a million users, who use the app for everything from drywalling to dog walking. So far the app offers 20 categories of tasks, but this number is growing too, and the company plans to go international. “It’s an efficient ecosystem that provides opportunities for everyone, customers and service providers alike,” Muneeb says.

WHY BUY WHEN YOU CAN SWAP?

More than a quirky business idea, AskforTask belongs to a growing collection of online platforms and business practices collectively referred to as the sharing (or collaborative) economy. Driven by big players Airbnb and Uber but encompassing a wide set of ventures, from shopping marketplaces such as Etsy and eBay to physical spaces for co-working, these new businesses are making it possible for consumers to obtain goods and services from one another rather than from traditional corporations. In so doing, they are purportedly transforming our economic future.

It’s true that the sharing economy is all around us these days. The Mesh Index, an online directory of sharing economy companies and initiatives, had more than 9,000 entries worldwide by 2013, and new startups are cropping up every day. (The year 2014 even saw the launch of Airbnb for Airbnb, a website connecting people looking for a place to stay while they rent out their homes using the original platform.) According to Jeremiah Owyang, founder of sharing economy innovation council Crowd Companies, more than 110 million North Americans participated in the sharing economy in 2015 and of these, 14 million were in Canada. Owyang claims the sharing economy is the biggest shift in the business landscape since the advent of the Internet itself. (CPA Magazine readers tend to agree: see “Sharing Economy Poll Results” below.)

Many of the sharing economy’s promises are socially minded — at times even anticapitalist — in nature. They include connecting people, curbing consumption, reducing waste, eliminating the middleman, flattening the hierarchy, offering flexible work and boosting local economies.

Sharing Economy Poll Results

The catchphrases have a similar bent: “people first,” “access over ownership” and “asset-light living,” among others. These ideals were crystallized in an oft-quoted 2010 TED Talk by researcher and sharing economy guru Rachel Botsman. Using the idea of a shared power drill as the icon of a new kind of business, she said, “It’s kind of ridiculous [to own a drill], right? Why don’t you rent the drill, or even better, rent out your own drill to other people and make some money from it?” The argument, in short: why buy, own or sell when you can share, rent or swap?

FROM BARTER AND EXCHANGE TO SMARTPHONE APPS

For all the talk of innovation surrounding the sharing economy, the underlying premise itself is not new: barter and exchange were among humanity’s first systems of economic transactions and ridesharing and skill swaps are by no means modern inventions. But the various initiatives that are generally lumped together under the umbrella terms “sharing” and “collaborative” mostly emerged in the early to mid-2000s and have a common genealogy.

The main catalyst, according to most observers, was the development of technology and the accompanying shifts in consumer behaviour: improved data analytics lowered the costs of matching buyers and sellers, cloud computing made it possible to exchange data and information seamlessly, and smartphones allowed people to access services instantly and from anywhere.

Meanwhile, changes in labour and the economy encouraged some consumers to adopt sharing as an alternative to traditional consumption and employment. It’s arguably no coincidence that many of the sharing economy’s largest firms were founded in the aftermath of the 2008 financial crisis. Against a backdrop of gloomy economic forecasts and growing environmental concerns, rosy terms such as “collaborative consumption” and “peer-to-peer trading” acquired a new cachet, especially (but not only) among technologically proficient but debt-stricken young people looking for flexible, low-cost and experience-driven lifestyles.

Fast-forward nearly 10 years, and the sharing economy has grown into the vast, powerful and unwieldy domain that it is today. Airbnb and Uber are unquestionably the standouts, occupying the lion’s share of press. But because of their size, they are causing some to question the entire movement and its socially minded promises. Given that the two companies have recently been valued at US$30 billion and US$68 billion respectively and are continuing to grow exponentially, thanks largely to the multimillion-dollar sums they receive from investors, critics wonder whether the sharing economy is actually leading us to a more equitable world. Far from being the harbinger of a postcapitalist economy, could it be, as blogger Timothy Taylor puts it, just a “triumph of public relations artistry”?

Sharing Platform Sample

This question might be easy to answer if Airbnb and Uber were the only defining entities in the sharing economy landscape. But the two megacompanies coexist with a large number of other ventures with vastly different business models — in fact, according to Fastcoexist.com, there could be as many as 729. These include not-for-profit neighbourhood tool libraries, peer-to-peer platforms such as AskforTask, which earn money on commissions or exchanges, and business-to-peer companies, which operate much like many traditional businesses in that they seek to maximize revenue per transaction. Zipcar, for instance, functions a lot like an ordinary short-term rental company; the difference is that users access cars via an app. (See “Sharing Platform Samples,” above.)

According to many observers, it’s futile to keep trying to bring all of these entities under a single label. “I don’t think we need one term that summarizes all these things,” says Jui Ramaprasad, an associate professor at McGill University’s Desautels Faculty of Management. “I actually think the best way to think about the phenomenon is that there is this new, emerging set of platforms that are enabling different forms of interaction and consumption.”

FLEXIBILITY, TRUST AND RELIABILITY

Proponents of the sharing economy emphasize the flexibility it provides for service providers and the convenience and cost-effectiveness it offers users — especially in the era of on-demand services such as Uber. “Everybody is just so busy with their lives [that they] don’t really have time to waste on things like cleaning their place or finding a plumber,” Mushtaq says. “[AskforTask allows them to] focus on working really hard or having a good social life ... without compromising on quality.” AskforTask’s “taskers” — a mix of professionals and regular people — go through an extensive interview and vetting process before being registered to the app database. Once they start working, they can obtain ratings and reviews, which serve as references for future “askers.” These mechanisms are hallmarks of sharing systems. “I think trust and reliability are two keystones for setting the precedent within the sharing economy,” Mushtaq says.

Price is another: even to the extent that these platforms do act as profit-making intermediaries, their fees are generally lower than those traditional businesses tend to demand. (AskforTask, for instance, extracts 15% to 25% from every transaction, depending on the cost of the task involved.)

The possibility of saving on costs and gaining in efficiency was what pushed Miami-based CPA Richard Lavina to cofound Taxfyle, the first sharing platform to break into the accounting world. Available as an app, the platform matches CPAs and other credentialled tax professionals with tax filers. The rates offered are generally 40% lower than brick-and-mortar tax preparer rates. Even so, Lavina says CPAs in the US offering their services through Taxfyle make roughly US$80 an hour on average, compared with the average rate of US$33 an hour that they would otherwise earn (he arrived at this calculation by using information from online forums and other sites). That’s because the platform’s algorithms cut out many of the non-revenue-generating processes that go into traditional CPA work. “It helps speed up the process on every front,” Lavina says. “So what you’re le with is a really efficient way of getting the customer and getting the job done.”

BACK TO CAPITALIST BUSINESS AS USUAL?

But the supplementary income, flexible hours and independence that come with working for a sharing platform are just one side of the coin. Indeed, critics of the sharing economy argue that these supposedly collaborative platforms are in fact morphing right into capitalist business as usual. The influence of Airbnb and Uber should not be underestimated in this regard, given their proven track records of anti-competitive behaviour. And while AskforTask and Taxfyle are faring well in their respective markets, thousands of startups have collapsed since the dawn of the sharing economy, unable to raise enough funds, keep up with competitors or find demand for their offerings. For example, SnapGoods and NeighborGoods — two startups designed to connect neighbours willing to share household items with one another — had more prospective lenders than users.

Beyond the startups that have tried and failed in the sharing economy, some of the most pressing concerns today involve sharers themselves. Ramaprasad suggests that the sharing economy could be reinforcing the worst aspects of the growing trend toward a freelance workforce (dubbed the “gig” or “freelance economy”). “It’s great that the sharing economy is enabling employment that wasn’t accessible before,” she says. “[That said], it’s encouraging this type of fragmented, precarious work [that can] become exploitative.”

Moreover, it’s unclear whether many sharing platforms are making a significant contribution to the local economies they purport to be supporting. For example, Waterloo-based tech worker and analyst Tom Slee, author of What’s Yours is Mine: Against the Sharing Economy, notes that large platforms generally exploit the same tax loopholes that allow large web-based companies to avoid local obligations. “If I rent a room in Montreal, that transaction as far as everybody is concerned takes place in Ireland. Airbnb is not contributing to the tax base of the cities in which it operates.”

PLATFORM CAPITALISM

These are precisely the reasons why some observers insist that terminology is important and distinctions must be made. Many critics have taken issue with the term “sharing” itself, arguing that much of what is being marketed as such is no more than renting or selling under another name. Moreover, the relentless growth of platforms such as Airbnb and Uber is what led German blogger Sascha Lobo and University of California, Davis professor Martin Kenney to coin the terms “platform capitalism” and “platform economy” to describe the subset of “collaborative” ventures whose high-profit-driven business models go against the anticapitalist values associated with the movement.

“People often confuse the ‘platform economy’ with the ‘collaborative economy,’” says Laurence Audette-Lagueux, a community architect for socially responsible bank Impak Finance and connector for the Montreal branch of OuiShare, a Paris-based international think-tank dedicated to studying the sharing economy. With hubs on four continents, OuiShare creates networks and promotes discussion through publications such as its OuiShare Magazine and events such as the annual OuiShare Fest, a gathering of entrepreneurs, activists and business owners working in or on the sharing economy. For Audette-Lagueux, huge for-profit platforms should be considered exceptions rather than the rule. “Those companies conform to the Silicon Valley ideal of large platforms with big money,” she says. “We have to talk about them, but we can’t let them become the norm of what we think about when we think of collaborative economies.”

OuiShare advocates collaborative practices that respect the ideals of horizontal governance and peer-to-peer exchange, where power and value are truly distributed among the members of a community. Audette-Lagueux cites the example of Juno, a ridesharing service that could arguably be considered a fairer version of Uber. That’s because Juno drivers are not just independent contractors for the company — they are also share- holders. Not only could this provide benefits to drivers in the short term if the company has an IPO; it will be essential in the long term, as self-driving cars begin to take over the market. “These are visionary people who are making sure that on the day when there is no more work, their drivers will have something to fall back on,” she says. “It’s encouraging.” Uber, meanwhile, has begun investing in self-driving car technology without any comparable changes to its business model in sight.

According to Audette-Lagueux, initiatives such as Juno shouldn’t just be considered fringe platforms. Like her colleagues at OuiShare, she believes they are the ones that are going to survive in the long run. This will be partly due to the imperative of reducing consumption in the face of accelerating climate change, but also due to problems inherent in current sharing monopolies. She cites the failure of many sharing startups and the questionable future of Airbnb and Uber (it’s estimated that Uber lost more than US$2 billion in 2016) as indications that the current model isn’t working.

MORE CHANGE, MORE QUESTIONS

But with those big players still very much on the scene, much remains to play out and there is no postcapitalist sea change anywhere in sight. In fact, Airbnb and Uber might simply be following the normal trajectory of successful enterprises — from nimble startups with good ideas to huge companies with growing pains. In that case, they would still have more phases to go through. Moreover, some analysts argue we should expect many sharing platforms to integrate further into the regular economy in coming years. Slee, for one, predicts we will see more partnerships between platforms and established businesses — a shift that is in fact already underway. Avis bought out Zipcar in 2013 and Whole Foods now has a partnership with online shopping platform Instacart. “I think the sense that it’s a different movement will fade out soon,” Slee says.

Whether or not the sharing economy holds true to its promise of more equitable economics, the movement will most likely continue generating important questions. Arguably the most pressing ones concern regulators, who must create an environment in which the public interest is protected and innovation, consumer choice and economic growth are all supported. The Canada Revenue Agency is developing a page on its website to inform sharing economy participants about their potential tax obligations, and several Canadian cities are experimenting with regulatory schemes targeting Uber and Airbnb.

Meanwhile, for the users, providers and analysts observing developments in the sharing economy, change is happening so quickly that new questions are sure to emerge even as the most urgent are answered. What will happen to sharing when robots come into play? What will happen to salaries? What will happen to work? Will sharing models buttress the increasing competitiveness of developing nations on global markets? As Audette-Lagueux puts it, “The questions that come with the sharing economy go far beyond ‘Well, there’s a power drill and how are people going to share it?’” Indeed, there are plenty of reasons to believe they’re taking us to a world beyond shared power drills, beyond markets, beyond work as we know it.

MORE ON THE SHARING ECONOMY

Go to cpacanada.ca/mag-sharing for info on a brick-and-mortar type of sharing venture: Toronto’s Centre for Social Innovation.The centre bills itself as a “coworking space, a community & a launchpad for people who are changing the world.”