The Growth of the Sharing Economy

RelayRides blogger Nicholas Pell shares his thoughts on the new economic model that is moving beyond just high-tech early adopter markets and is going global

The sharing economy was once restricted to a few early adopter cities and forward-thinking individuals, but now in 2012, it’s a bona fide movement. No longer just in big, hip, urban centers, you can find examples of the sharing economy just about everywhere in the United States and around the globe.

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The first indications that the sharing economy was picking up steam were when some of the biggest venture capital firms started to take notice. Airbnb was a sharing economy trailblazer receiving over $100 million from Andreessen Horowitz, DST Global and General Catalyst Partners—it currently has a valuation of between two and three billion dollars. As one of the pioneers in the new economic movement and the first peer-to-peer car sharing company, RelayRides also lent a great deal of credibility to the space when it received funding from Shasta Ventures, August Capital, Google Ventures and General Motors Ventures.

Another major milestone of the sharing economy’s evolution—and growing legitimacy beyond early adopter markets—was RelayRides’ partnership with General Motors to make peer-to-peer car sharing easier. The partnership lets owners of OnStar-enabled GM cars rent their cars out via RelayRides without having to arrange for a key exchange. With millions of GM cars on the road that could eligible to participate in the collaboration, the potential is huge.

This points to a serious interest in the phenomenon. Clearly, venture capital firms and the world’s biggest automotive manufacturer aren’t ponying up tens of millions of dollars to help the sharing economy grow without having confidence in the economic model’s future. These are companies who fully expect to see a return on their investment. All the money coming in from venture capital firms has provided the sharing economy with a much needed critical mass. And once that happens, the mainstream media begins to take attention. Open up an issue of Fast Company, or even your local newspaper’s Sunday magazine. It’s hard to not see articles about the sharing economy in 2012. It’s definitely an “it” moment for an entire sector of the economy.

And with good reason. The Airbnb cash infusion and valuation is just one example of how the sharing economy is about to make a quantum leap from media buzz story to a part of our daily lives that we soon won’t be able to imagine life without. Airbnb has another round of funding in the works and the word on the street is that this one is going to be really big. RelayRides is no longer limited to a few urban centers. Rather, you can utilize our peer-to-peer car-sharing service in nearly 1,000 US cities in 48 states.

Another reason that the sharing economy is here to stay? Whereas many traditional companies, such as major hotels, or fleet-based car sharing, are limited to operations in populated urban centers, the sharing economy can exist literally anywhere. To use the example of the RelayRides marketplace, because individuals renting out their private vehicles don’t need to worry about profitability and high utilization rates—conversely traditional fleet based car sharing companies do—RelayRides can spread the benefits of car sharing to rural and suburban areas. In a sense RelayRides can ‘democratize car sharing.’ Similarly, you don’t have to be in New York City to make extra cash renting out your spare bedroom to travelers. There are plenty of people who want to visit the smallest hamlets in America to get away from it all. The sharing economy is helping them to do it, while helping people convert extra space into extra cash.

All of these are great indications that the sharing economy is something that cannot be ignored. We suggest if you haven’t already, check it out. Making over $1,000 dollars a month renting your idle vehicle, or renting cars for as low as $5 on the RelayRides marketplace is a great place to start.