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When Business-Model Disruption Is the Status Quo

Sure, you've heard about the sharing economy before. But this time you need to listen.
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It's communism. It's an unsustainable fad. It's a seismic social and economic shift that will forever change the way people consume.

Most reactions to "the sharing economy" fall into one of these categories, and chances are decent that at least two out of three are correct. But those who dismiss collaborative consumption as a business narrative they've heard before--that is, naysayers in the first two camps--simply aren't paying attention.

It's true that the P2P networks of today--Airbnb, Kickstarter, TaskRabbit--have technological roots spanning the open-source movement of the early 1990s and the earliest P2P auction websites (yep, eBay). Still: The sharing economy of 2013 is not the Red Hat play of 1998.

This is not about achieving economies of scale on intellectual capital or challenging the definition of ownership in a digital economy. It's not even about eliminating the middleman and connecting people one-on-one to eke value from outgrown clothes and vanquished video games.

"What's actually happening is that these sharing-economy companies are going places where Adam Smith's 'invisible hand' cannot," writes Dominic Basulto (@dominicbasulto) for the Washington Post. "They are re-calibrating supply and demand, giving consumers access to otherwise unused capacity or idle assets." They're companies led by capitalists, sharing economy or not.

Now don't get us wrong. We acknowledge that today's collaborative consumption was made possible by the technological investments and social revolutions of earlier generations. So perhaps the storyline is a familiar one. But this version is different--in large part because of its heroes and heroines.

"Forty years ago, even 20 years ago, a young person's first thought, or even second or third thought, was certainly not to start a business. That was selling out--an idea that has rather tellingly disappeared from our vocabulary," writes William Deresiewicz in the New York Times. "Today's ideal social form is not the commune or the movement or even the individual creator as such; it's the small business. Every artistic or moral aspiration--music, food, good works, what have you--is expressed in those terms. Call it Generation Sell."

Despite what you may have read in Time, the Millennials are not "lazy, entitled narcissists" seeking instant celebrity. They are born entrepreneurs who've grown up watching Google and Apple innovate at terrifying speed and thinking that business-model disruption is, quite simply, business. The founders of Facebook, Airbnb, Tumblr, and FlightCar are mostly Millennials, and they are successfully creating markets where none existed 10 or even five years ago. At this point, the question is not whether collaborative consumption will catch on (it's already a way of life for a generation), but whether government regulation and taxation is powerful enough to quash it. They same question could have been asked of the first post-Industrial entrepreneurial generation as well.

Is it a coincidence the oldest Millennials were born the same year Apple launched the Macintosh with its now-iconic "1984" TV ad and just after Inc. unveiled the Inc. 500--the first-ever index of the entrepreneurial economy? Yeah, we didn't think so either. Seems like there's an equation here somewhere: sharing + business + fearlessness = what? Something sizable, we think. The sharing economy has arrived.

We built this engine. Now let's see what she can do.

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Last updated: Sep 27, 2013

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The Build Network staff curates provocative, actionable leadership advice for executive teams running sustained-growth companies.




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