When Cory Silverberg, a Toronto-based sex educator and author, decided two years ago to write a kids book on human reproduction called What Makes a Baby, he considered two options. “My first book was done through a traditional publisher, but I wanted to try publishing my own work,” he says. For financial backing, he turned to New York–based Kickstarter, the world’s largest online funding platform, which allows groups of people to pitch in a little money to crowd-fund an idea they believe in; in return for their support, the investors later collect token rewards or early access to the new product. “I thought it would be a good test for the book,” says Silverberg. “If it failed, I’d have been crushed, but it might have shown me the book idea was not so good.”
Silverberg set a target of $9,500, which he felt was the minimum amount needed to print 1,000 hardcover, 32-page picture books. He made a video explaining his project, posted it to the Kickstarter website this February and waited. Thirty days later, the masses had spoken: Silverberg’s book attracted 1,954 backers and raised $65,516—the project was over-funded by a stunning 689%.
Silverberg’s success with Kickstarter is a good example of the sort of collaborative capitalism that embodies the “sharing economy.” While not a fundamentally new idea—humans have been collaborating to buy, sell and finance things for centuries—the pivotal role that the Internet now plays in our lives, combined with a growing interest in grassroots business solutions, has made a sharing-based economy more viable than ever before.
Where Kickstarter uses the web to connect like-minded niche consumers and capitalizes on existing social networks for marketing, other examples of the sharing economy follow a more traditional path. San Francisco–based Airbnb, a sort of hotel booking site for couch surfers, allows people who have extra space (like a spare room, guest house or sofa) to rent it out to travellers looking for a place to stay; “trust scores,” guest reviews and support from Airbnb staff give the site a sense of community that’s missing from competitors Craigslist or Kijiji. Another online service, LooseCubes, based in Brooklyn, N.Y., operates as the workplace equivalent of Airbnb, hooking up independent workers with companies wanting to rent out surplus office space. Other sharing-based outfits, such as ThreadUP (which allows parents to exchange, or sell, clothing their kids have outgrown) or Fiverr (where people offer to perform small helpful or entertaining tasks for $5 a pop), act as a sort of virtual flea market. In each case, an old business idea has been updated for the Internet age, with the online sharing of resources allowing entrepreneurs to reach more customers, and faster.
Whatever the advantages presented by technology, though, Silverberg insists that the key to sharing-based success remains old-fashioned marketing. “I did well with Kickstarter because of the number of people I could reach out to through my Facebook,” he says. “I’ve run a business before, and I know that no matter what the platform is, your success often comes down to the effort you put into building these networks and reaching out to people.”
THREE BIG SHARING SUCCESS STORIES
RENT THE RUNWAY (renttherunway.com)
What it is: Customers rent designer dresses and accessories for four days, at 10% of retail.
Why it works: Shoppers get designer garbs for a fraction of the price; the company hits break-even after only a handful of rentals.
Marker of success: Each week 40,000 new members sign up.
Caveat emptor: Swift growth has led to some hiccups, including not always being able to fill orders. Only operating in the U.S. for now.
What it is: A digital marketplace for goods-and-service exchange.
Marker of success: Launched in February 2012, the site saw 40,000 unique visitors in a month. Urban garden shares are already a big hit.
Why it works: Customers like the trust scores that rate service reliability; Uniiverse can use consumer profiles to offer custom-tailored products and services.
Caveat emptor: Users must connect to Uniiverse with a social network profile, which could limit the site’s potential growth.
What it is: The world’s largest car-sharing and car-club service.
Marker of success: 560,000 members in over 50 cities in North America and the U.K.
Why it works: Users save up to $500 a month compared to personal car ownership; the more subscribers Zipcar gets, the more it can lower its cost of operations.
Caveat emptor: Faces major competition from other car-share co-ops, most notably Autoshare in Toronto and Modo in Vancouver.