An Economic Model of Sharing (“Observations from Circle One”)

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Dear Friends,

 As the Internet continues to grow and connect billions of people all over the world, it is also becoming more social, local and mobile (as defined in Silicon Valley as “SoLoMo”). In parallel, we are also witnessing the emergence of the “Internet of Things”, known as Machine to Machine Communications (or M2M), which connects millions and even billions of non-human elements from all areas of life, such as sensors, cameras, un-manned-vehicles, kitchen aid devices, etc. As these two networks converge, it seems that the global economy will be change dramatically, shifting away from product ownership and rental business models, towards a service-oriented “Sharing Economy”. We will share and use many more products, assets, and resources that today we prefer to either buy & own, or rent for a certain period of time, mostly  when traveling abroad.

 Today, we already see such changes in several business arenas, as well as for personal purposes. For example, the “Cloud Computing” infrastructure is designed to allow for small and medium sized businesses to share computing resources, and pay as they grow and increase utilization. More and more startup companies utilize the “Cloud” as their computing resource. These companies do not need to make costly investments in computing power, storage, and software ahead of time, knowing its utilization will be low and inefficient. On the other hand, big companies with excess computing power can save money by sharing it with other smaller companies via the Cloud infrastructure. But sharing resources are also applicable for personal purposes. People around the world share housing accommodations via the Internet in order to better utilize personal properties or other privately-owned assets such as an extra room at home that can be used by tourists or business travelers, or an unutilized parking lot/garage that can service someone who is looking for a parking space.

With that in mind, let us look at tomorrow’s world of urban transportation. For example, new cities are being planned and built with a smaller “footprint”, which translates into building high rises and reducing the urban area in order to increase infrastructure efficiency – often in order to deliver energy and water, or to collect and dispose of waste. As a result, people are using higher vertical transportation (elevators), while horizontal transportation routes grow shorter. Still, we need to use our own cars or public transportation to travel long distances. But as we do not own our own elevators, why own our own cars? Why can’t we use “horizontal elevators”, so to speak?

 Today, driverless car technology is becoming safe and is already being adopted by several states in the US that are issuing the required regulations for driverless cars, such as the ones Google has developed. With sensing and imaging technology, GPS, and advanced navigation systems, cars can reach destinations with no human intervention, while driving according to safe driving rules with no collisions. Airliners fly most of the time automatically and can even land on the ground and taxi to their designated gate safely – so why not cars? The Internet of Things connects devices so that everything can be coordinated, monitored and controlled via the Internet.

Such technology advancement and efficiency will reach a point where cars can be shared as an “on-demand” resource, just like an elevator. Car ownership is expensive. Parking spaces are not utilized during most hours of the day, and we need to service our cars, fuel them, and park them. Imagine transportation as a “Cloud-shared” resource.  By using an application, you can order any kind of a vehicle on demand that will fit your specific needs at certain times. You can use an electric bicycle if you are alone and riding a short distance in nice weather, order a bigger car if you need to drive long distance with your family members, or even have a pickup truck when you need it. Your “Shared vehicle” will pick you up at the time and place you define, and drop you off at your final destination. No need to park it or service it. Not to mention that your personalized content will be available for you via the Internet – your videos, music and other types of content, as well as your personal mobile communication, which can be accessed using cloud technology.

As we are more connected, and as social trust grow, our economy will drive us to share more products and resources, and in a way, capitalism will be shaped in a more socialistic way. We will own less, and rent less, and most of our needs will be translated into services shared by communities. We are moving towards an era of an economic model of sharing.

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