My first entrepreneurial venture in the so-called “sharing economy” happened accidentally. It was 2009, and I had just moved to Cambridge, MA to start at MIT Sloan. I brought my car with me because I was sure I would need it. As it turned out, the only time I used it was to go grocery shopping; mostly it sat idle. Word got around that I had a car, and I soon found myself fielding requests to borrow it from friends. One suggested I charge for the privilege.
Presto! My community car sharing business was born. The rate was $5 an hour or $40 a day. Because of high demand, I cut a deal with other students who had cars, and created an online booking system so that customers would know what was available, and where they could pick up keys. Within weeks I was running a small fleet for about 80 customers. Business was brisk: customers appreciated the inexpensive and easy access to automobiles, and those who rented out their vehicles enjoyed a tidy profit that helped defray the high cost of car ownership.
Today the sharing economy – the peer-to-peer exchange of goods and services – is being called next big trend in social commerce, and represents what some analysts say is a potential $110 billion market. Internet technology and access to information allow us to share our belongings with others more easily than ever before and wring value out of stuff we already own. That, coupled with many people’s desire to lead greener, less consumptive lives, is driving this trend.
To me, the sharing economy is about getting smarter and more efficient about the durable goods we use. I am a native of Colombia – where goods are recycled and fixed again and again. When I spent a year as an exchange student outside of Seattle, I remember marveling that every single household owned a lawn mower and snow blower. The amount of time the individual owners spent mowing the lawn or blowing snow was very small, so there was a lot of wasted capacity sitting in those suburban garages. The sharing economy harnesses that capacity.
Already, there is a new generation of businesses cropping up in the sharing economy. RelayRides, the peer-to-peer car rental community, enables people to make extra money while helping neighbors run errands. Neighborgoods gives people access to power tools and sports equipment. ThredUP, allows people to swap gently used kids’ clothes.
My new endeavor, which I founded with fellow Sloan alum, Tal Snir, is iCircl, a trust-based subletting platform for students, alumni, and faculty of top graduate schools. Users create profiles and post details on their properties, which are searchable within the network by city and date. Those interested in subletting properties reach out directly to those who have posted rental opportunities. We estimate that users can make $4,000-$8,500 a year renting out their place.
Trust is at the crux of what we’re doing. There is a segment of the population that feels perfectly comfortable with strangers using their apartment, and has no qualms using a site like Craigslist to list their place. There’s also a segment of the population that would never in their wildest dreams let strangers rent their place. There’s a final segment that thinks: “I would rent my place only if I felt I could trust the person who is renting it.” That’s where we come in.
We have created a closed network for like-minded people, which allow users to tap into their extended networks, tailor how they market their properties, and choose the variables that make them feel comfortable about letting others stay in their homes. Trust is subjective: Some people trust a certain school brand. Others trust people with similar life backgrounds. And still others trust only people who are friends of their friends. Our site lets you customize the qualities that help you trust.
We have more trust-enhancing features in the pipeline. Take our subjective trust score, for instance. We’re building an algorithm that gauges how much Person A trusts Person B. The score will take into account how many friends they have in common, their professions, their ages, whether or not they went to the same school. It’s meant to take some of the guesswork out of the process. We believe that the more tools we give people the more likely they are to use our service.
The quest for trust has been fascinating. Today, we have over 2,000 users, and this month, we are expanding from six schools to 25, including a few international schools, such as London Business School and Spain’s IESE. The major and likely permanent shift in the strength of the U.S. economy and its implication on consumers’ budgets, society’s renewed social conscience, and the ever-strengthening social web, will allow sharing businesses like ours to thrive.
Jaime Contreras MBA ’11, is the co-founder of iCircl, the trust-based subletting platform
Read more in Bloomberg Businessweek
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