The evolution of crowd-based capitalismAug 12, 2017 Blog Crowd-based capatalism , Sharing economy
Arun Sundararajan said at the 70th CFA Institute Annual Conference that he noticed in 2011 “a particular kind of change that technology was engendering”. He says that today’s technological shifts are moving us away from managerial capitalism to crowd-based iteration. Large organisations are declining and products and services are distributed not by a firm, but by divergent crowds. Uber and Lyft, where drivers use their personal cars to offer a chauffeur service in exchange for fees, are examples of this.
Same with BlaBlaCar, a French firm where drivers sell extra seats in their vehicles. “Without any investment, BlaBlaCar has developed the capacity of a multinational rail network and, on a single day five times as many people travel by BlaBlaCar than by Eurostar”.
Airbnb is another example where home owners convert their homes into short-stay rental properties. There are even crowd-based platforms that lend out clothing.
Sundararajan says that the common denominator in all these platforms is trust and trust lies at the heart of the model. People trust complete strangers with their cars, their houses and even their clothes. Our trust is developed from “digital cues” according to him – we use online information about individuals and organisations to determine who we can associate ourselves with. This can include reviews on social media channels such as Facebook and LinkedIn, third-parties or brand certification, or digital peer feedback through websites like Yelp.
The concept of work as labor in exchange for salaries is disappearing, according to Sundararajan. “The sharing economy is on the ascent, and those who do not adapt to the new reality may pay the price”.
This information is from an article in Enterprising Investor – read the full article here.