How does the rest of the world discover how to generate revenue from idle assets?
When Uber was initially mentioned to us, most of us probably had a similar reaction.
“I don’t want to take a trip in someone else’s car.” Why can’t we just call a cab like the rest of the world?”
Because most of us got over our reservations and booked an Uber when we needed a ride, Uber currently has a market capitalisation of $78 billion. Apart from the company’s financial success, millions of people worldwide have used Uber as a source of income when they need additional cash or can’t find work.
Do you recall when you first heard of Earbob?
“I’m not going to sleep in the living room of some unknown stranger.” “What am I, a college student backpacking through Europe?” “What am I, a college student backpacking across Europe?”
Last year, Airbnb generated $3.4 billion in revenue by filling a market need: those who couldn’t afford it could pay less than it would cost to rent a hotel, and those who could afford it could suddenly rent a full house for their vacation.
Turo, a newcomer to the market that incorporates both business models, is presently valued at over $1 billion, even though they haven’t been renting out personal vehicles to others for nearly as long as the other two.
What can we learn from this trip down memory lane, examining innovative company models that have swept the globe?
For one thing, brilliant new company ideas are frequently regarded as insane. Inquire about Albert Einstein or Nikola Tesla, for example.
Perhaps more crucially, we can learn – if we choose to – that the new gig economy and technological advancements have created a slew of new ways to tap into the value locked up in idle assets.
People willing to embrace these new sharing economies and put their idle assets to work can earn billions of dollars. As we go through a handful of them, join me on a money-making adventure.
How to Profit from the Rental Market
It’s no secret that the world is filled with copycats. If you listen to interviews or episodes of “How I Built That” with the creators of Uber or Airbnb, you’ll hear a lot of the same story that authors, inventors, founders, and moviemakers are all too acquainted with.
“We pitched our idea to every VC and Angel Investor firm in Silicon Valley, and the only ones that would meet with us laughed us out of the room.” We couldn’t answer the phone fast enough to field their calls requesting to take us out to lunch when we made our first million.”
It’s an age-old legend. The world’s movers and shakers captured lightning in a bottle, but the people whose main job is to fund those new innovative products and ideas were uninterested. Until they bootstrapped, begged friends and family for money, and survived for a year on Ramen noodles to make it all happen.
After that, we all know what happens: fame, money, and sky-high stress levels.
And then there are the imitators.
Instead of developing their longer-lasting lightbulb, many of the same investors who passed on the wonderful concept the first time around will support a startup competitor with the same idea, believing that lightning can strike twice. As we’ve seen with Lyft, some can at least keep their heads above water, but they rarely get close to the original.
It’s called first mover’s advantage for a reason in business school.
People worldwide began to try to figure out what other underused assets we might use technology to find revenue in once all of the copycats were funded and in the market.
EBTH turned estate sales into a gamified website and app that lets individuals browse through collectables, furniture, antiques, and other personal items that the deceased no longer need and their family no longer wants.
In the outdoor equipment sector, it appears that the first responses to Uber and Airbnb will never be matched. REI began renting out some of their outdoor equipment to co-op members rather than selling them. Hundreds of other copycats sprang up to follow this idea, but none of them was able to make it stick.
Turo, as previously mentioned, allowed any car owner with a smartphone to rent out their vehicles to anyone who needed one for an hour or a month. As the business grew, small businesses across the country began to purchase fleets of automobiles solely to list them on the platform.
COOP has elevated Turo to a new level and market, which has shifted the technology from personal vehicles to commercial vehicles such as trucks, tractors, trailers, and vans. COOP is supported by Ryder, whereas Turo was a Silicon Valley startup. This implies that the company already has a lot of money and power. Imagine where COOP will be in five years if Turo is already worth $1 billion. This is a firm to keep an eye on, as tens of thousands of businesses around the country have automobiles in their parking lots that are lying idle when they could be bringing in income.
These instances are meant to demonstrate the fire that has engulfed both the supply and demand sides of this new business model, which allows owners of idle assets to rent them out to make money. Some people do this part-time to supplement their income or bring in much-needed revenue, while others start entirely new enterprises to provide assets to the platforms.
Every new business and idea includes early adopters who get on board as soon as they hear about it and laggards who will only utilise the product or service after it has been thoroughly tested. All of their friends and relatives have tried it.
If you fall into the latter category, it’s time to look around and recognise that this isn’t a fad. The asset sharing economy is here to stay; the only question is whether you’ll utilise it to generate money on the supply side or make life easier on the demand side.
The Hotel Industry and the Sharing Economy
We just highlighted AirBnB initially, so now is a good time to go a little deeper and look at the competition that Vrbo has created in their marketplace.
One of the first decisions an entrepreneur must make when starting a firm is how to compete if they are not the first to enter a market. To the untrained eye, the decision may appear straightforward, but a lot goes into it. At the most fundamental level, an entrepreneur or founder has two options:
- Compete on cost (sell my widget or provide my service for cheaper)
- Differentiate yourself from the competition (make my widget unique or better)
Vrbo chose the latter instead of tackling the full market of away-from-home rentals, deciding to fight with Airbnb for holiday rentals only. This could be a smart approach, as many people are familiar with Airbnb for renting rooms from individuals rather than hotels. Still, they haven’t done a great job of selling that Airbnb also allows you to rent full homes – which is Vrbo’s main branding and marketing focus.
For some fun arithmetic, Vrbo’s revenue in 2019 was 27 per cent of AirBnB’s. Vrbo was valued at roughly $14 billion by Barron’s in 2021. HomeAway acquired vrbo in 2006, and Expedia acquired HomeAway in 2015. (the travel industry is often fueled through growth by acquisition). Expedia’s total market valuation in 2019 was $19.3 billion, with the majority of that coming from their newly acquired firm (Vrbo).
In another way, people willing to put their underused assets, such as vacation houses or vehicles, on the market to take advantage of the sharing economy can make a lot of money.
Recreational Vehicles and the Sharing Economy (RVs)
We’ve seen Airbnb lose market share to specialist competitors (Vrbo for holiday rentals), and we see other niche companies succeed in the vacation vehicle sharing economy.
If you aren’t an RV fan, you may not be aware that Outdoorsy and the newcomer Camplify is causing a stir in the RV market.
Based in the United States, Outdoorsy generated $325 million in revenue in 2019 by booking 840,000 travel days with 620,000 consumers.
Champlify, which began in Australia and is now available in the United Kingdom, debuted in 2019 with a GTV of $8 million, which grew to $33 million by 2021.
Both of these companies are niche markets inside niche markets. Still, their business methods are similar: they make money by disrupting existing industries (hotels, rental car companies) and enabling people to generate cash using assets they already possess.
COOP: Taking the Sharing Economy from Peer-to-Peer to Business-to-Business
The Peer-to-Peer element is one of the fundamental similarities between the successful sharing economy platforms we’ve seen so far (P2P). They were all successful because they connected people who needed something (a ride, a vehicle, a room, or an RV) with others who possessed one that wasn’t being used or who were ready to supply it temporarily.
We can argue about LLCs and sole proprietorships, but the persons who provided their assets to realise stored value were individuals or small businesses, regardless of organisational structure. COOP, the next permutation in an ever-evolving sector, moved that model to the B2B market, allowing businesses large and small to realise the value held in their fleet vehicles that aren’t being used.
Small companies worldwide have been affected by the lockdowns, with many struggling to make ends meet after being forced to close their doors. Some businesses could remain ahead of the curve by switching to an online-only strategy, while others found creative ways to continue in business, and some were forced to close their doors permanently.
This new ability for businesses to use their vehicles that are sitting idle due to decreased business, worker shortages, or other restrictions and find a way for the companies to bring in revenue through these assets they already own by renting them to other companies who may need for them is probably one of the best uses of technology and the sharing economy network today.
This is one of the rare instances in which everyone benefits: the firm in need of a car can save money, time, and aggravation by renting a vehicle from another small business that is not using it that day, thanks to a simple software and platform. Small businesses with idle vehicles can generate much-needed money by listing them on the COOP network and renting them out when the demand arises.
Small businesses also benefit from the satisfaction of knowing that they are doing business with another small firm, allowing them to better utilise their assets when everything appears to be out of whack.
Furthermore, Ryder supports COOP, implying that, while the technology is young and the concept of a B2B sharing economy is still in its infancy, the platform is backed by decades of expertise and know-how to keep it functioning, even in the most trying of circumstances.
You don’t have the chance to feel pleased and hopeful about new developing technology very frequently because most of what we see is either giving entertainment value or offering minor benefits to the end-user. However, suppose COOP can assist small firms to stay afloat by allowing them to realise the stored value in their assets through the sharing economy. In that case, it is a technology that any entrepreneur, businessperson, or supporter of small enterprises should be excited about.
Get on the Train or Get Left Behind in the Sharing Economy
Many of the early reservations that some of us old-timers had when we first heard about Uber, Airbnb, and this newfangled technology that allowed individuals to share their cars and homes with strangers for money were addressed in this essay.
But it’s no longer cutting-edge, and the business has taken on a life of its own. As we’ve seen in recent years, the capacity to realise the value stored in owned assets has demonstrated the ability to assist individuals in times of need.
When the economy was in bad shape, it was a well-known symptom that unemployment would rise, and many people would find themselves in dire straits. People who had either overextended during good times or found themselves unable to replace their income streams would buy assets at fire-sale prices.
The sharing economy has disrupted traditional sectors and the cause-and-effect relationship that we have become accustomed to. People who possess assets no longer have to sell them at a loss to make ends meet; instead, they can utilise them to supplement their income when things go wrong, or business slows down.
COOP provides a solution for anyone who has vehicles lying idle to instead bring in a consistent stream of money when several small businesses are on the verge of bankruptcy due to declining demand or laws preventing them from going about their normal business.
For those who are too elderly to have been born into the “digital native” culture of Generation Y and Z, technology may be a genuine pain at times. However, in this circumstance, and at this time, it could very well be some of our saving Grace.
- Hunter-gatherers (our forefathers) had no idea of private property because, to survive, their tribes shared everything. The “sharing economy” concept, according to Sam Bowles, an economist at the University of Massachusetts, is considerably older than we realise. He and other academics believe private property emerged only after farming began.
- The world’s most well-known sharing economy, Uber, began by linking users to “black cars” or expensive SUVs for special occasions.
- By 2025, the sharing economy is expected to be worth $335 billion.
- In the next 12 years, companies in the sharing economy are expected to grow by 2,133 per cent.
- In 2021, over 86 million Americans participated in the sharing economy.
- The sharing economy has expanded beyond renting rooms and rides to include finance, personal and commercial vehicles, parking spaces, bicycles, grocery shoppers, storage spaces, office spaces, freelancers, seats on private planes, first-class bus seats in the United Kingdom, couches, carpools, and many other necessities of daily life.