The Sharing Economy

Mark Suster

@msuster

LeWeb London, June 2013

What new can a VC really tell you? 2

After 2 days of the sharing economy

3

I thought I’d give some context to

Why sharing / collaborative consumption?

Why now? What next?

Prices

4

Network

Drivers of our Future World

Economics Un / under-

employment Debt Globalization Scarce

Resources Transparency Demographic

Shifts

1. Prices

5

6

The common theme of the

biggest Internet successes has

been “deflation”

7

Biggest Internet players “disrupted” incumbents on price

8

Disruptive Technologies are

2Less

Functionality /

Performance

3Lower

Margins

See “Innovator’s Dilemma - Clayton Christensen

1Significantl

y Lower Prices

9

Disruptive companies offer LESS functionality & compete

with “non consumption”

See: http://www.bothsidesofthetable.com/2011/12/22/the-amazing-power-of-deflationary-economics-for-startups/

It’s why the TV industry still can’t get its head around

10

1 billion monthly uniques 4 billion hours > 150 videos watched / year for every human

11

3.4 billion video views / month

> 25,000 video creators

250 million subscribers

80% audience 13-34

40% mobile

2. Network

12

Of course we now know that 1/3rd of world is now online

13Sources: U.S. Bureau of the Census, World Bank

1995 2000 2005 2010 2012

44

411

1,019

2,019

2,291 World Internet users (M)

14

And per Mary Meeker’s slides we know the audience (& opportunity) is now global

15

In just 4 years 71% of the world’s literate population will have a smart phone

Source: Benedict Evans (http://www.slideshare.net/bge20/2013-05-bea)

16

Incumbents simply find it too hard give up juicy margins

NetworkPrices /Margin

Startups should focus on non-consumption & they will find it hard to compete

17

3. Economics

18

Student debt in US along = $1 trillion. $100 million new / year. 2x rate of 10 years ago.

19Source: the Atlantic: http://www.theatlantic.com/business/archive/2012/10/europes-most-tragic-graph-greek-youth-unemployment-hits-55/263118/

We are risking an entire generation who don’t get on the career ladder

20

The sharing economy isn’t new. It’s just more urgent

Un / under-employment Debt Globalization Scarce Resources Transparency Demographics

And it’s not going away

21

Trade Guilds

Wage Protectio

n / Limited Supply

Top down organization struggling to keep up with innovation or needs of

the people

Universities

High-Paid Jobs

Government

Taxation, Currency

When governments can no longer properly look after their people, people will look for themselves

Capitalism.

22

In the past forced migrations were the only answer *

23

Increasingly IT-enabled people can tap into global demand networks

* We are of course seeing a world of digital have’s and have-not’s. Mobile phones bridge this gap. Who will develop services for the worlds poorest?

24

Thomas Friedman

said it best

some of world’s most talented people live in economies that can’t pay them a “global market price”

The sharing economy will have new “market-makers”

Will they all be benevolent in the future?

Market forces, transparency & new disruptions must keep them in check

25

26

Radio. Television. Telephony. Twitter. It’s the natural extension to a global, transparent world.

Open = empowered. But also aware. And disenfranchised.

Of course all of this open data can be mined in real time. For business. And government.

For marketplaces this can help with trust, authority, safety, marketing, & planning.Note: I’m a proud investor in DataSift

28

1. THE ECONOMICS OF “GLOBAL”

Comparatively richer countries want to tap into enormous pool of intelligent resources in countries with lower wages

29

Some of the world’s most talented film maker’s can’t just relocate to Los Angeles

30

31

Artists struggling to earn a global wage suddenly find demand at higher prices

30 million registered users

65 million month uniques

2.5 billion monthly page views

32

2. EMPOWERING THE

UNDER-EMPLOYED

With large underemployment people can earn extra $$ staying at home, while satisfying demand to avoid kennels.

33

And this is true of many of the peer-to-peer marketplaces.

34

35

3. MOVE FROM HIERARCHIC TO

FLAT STRUCTURES

36

Lending Club now so widely accepted even used by hedge funds to invest

directly in consumer loans

37

And of course startups can now more easily tap into pools of angel investors directly

38

3. REMOVING PHYSICAL

BOUNDARIES

By removing physical boundaries you create win-win opportunities for both instructors & students

39

Example Industries: Education Music Lessons Personal Trainers Psychologists

40

4. EFFICIENCY GAINS IN EXISTING

MARKETS

Many of these markets exist, the Internet is just making them much more efficient

41

So What’s Next?

42

43

HELPING BUSINESSES TAP

INTO PEER NETWORKS

Entrepreneurs often start with consumer ideas. Helping enterprise tap into peer networks may prove even larger

44

45

Recap – in a world of economic challenges & large

networks … the “sharing economy” will thrive.

Will you find your place in it?

The Sharing Economy

Thank you!

Mark Suster - @msusterLeWeb, June 2013