There’s a good chance that after following our sharing economy series you might begin to think, “This all sounds very interesting. Why shouldn’t I start a sharing-based business myself?” And why not? After all, this is one of the most promising, dynamic and growing sectors.
But before you go to your boss to let her know your new career plans, you need to first start thinking about few critical elements like an idea for a business and a business model. Why? Because every innovation begins with an idea and without a good business model it would probably be impossible to succeed no matter how good your idea is. This ain’t easy, but we’re here to help!
Instead of providing you just with academic references on innovation and business model development (although we recommend you check them out), we decided it would be best to listen to the people who are already involved in the sharing economy and learn from their experience.
So we talked with Tri Tran, co-founder and CEO of Munchery, Jennifer Lee, founder of ClosetDash Shop, Kevin Clark, founder and CEO of uSwapia.com , Eddie Patzsch, founder of Trablr and Tristan Pollock, COO and cofounder of Storefront.
I asked all of them how they came up with their idea. Here’s what they told us:
Tri (Munchery - the marketplace for ordering home-delivered meals from local chefs): We came up with it the best way you can - by scratching our own itch and solving our own problem. We were busy professionals with young families at home, and we desperately wanted a home dinner option that was convenient, high quality, good for you, featured a variety of options and wouldn’t break the bank.
Jen (ClosetDash Shop – the place to shop and swap designer fashions): I started hosting pop-up swap parties, and what started as a 25-person event blew up to over 100 people attending and us swapping over 1,000 items! Seeing the excitement and joy of the people swapping made me realize there was a real demand for this kind of service. Clothes were always the biggest category so I decided to focus in on clothes and open a “Swap Shop” where people could swap their pieces anytime, whether through our online platform or our brick and mortar shop!
Kevin (uSwapia.com - facilitates the swapping of different services and artisan goods): I came up with the idea for uSwapia in my acupuncture practice, as many people who could not afford acupuncture treatments asked whether or not they could barter different services or goods in exchange for acupuncture…I got many things I'd normally be paying for, for free, in exchange for something that is easy to provide and enjoyable to do. Sometimes it didn't work out, however, as the "rate of exchange" was difficult to come up with. So, I figured I'd create a system that takes that complication out of the equation. Thus, uSwapia, came to be.
Eddie (Trablr - lets you book and plan your entire trip using only share sites): One problem is that many of these sites vary in popularity by region, so it's hard to know which are the most popular in your area and what availability exists from site to site. According to research by one of our partners, the average person searching for a vacation rental travels to four different websites before booking, Trablr was hatched in order to eliminate this behavior, helping you plan your entire trip just like you would with Kayak, Expedia, Orbitz, etc.
Tristan (Storefront - the marketplace for short-term retail space): Erik and my background is in social entrepreneurship and e-commerce, so when we saw retail vacancies nearly double the historic average, the trend of short-term retail rising, and our family and friends struggling with traditional stores as well as at attempting pop-up shops, we wanted to create something that made opening an offline store as easy as an online store. Enter Storefront.
And what about their business model? Just like most other sharing-based companies their revenue model is fee-based. Yet, the answer to the question of how to make money doesn’t end here. An aspiring entrepreneur still needs to figure out what the value offering of the business, target market, positioning in the marketplace, core competencies and scope are in order to build a successful business model.
So we asked all five what advice they have to aspiring entrepreneurs who wants to join the sharing economy. They all had good advice:
Ask around, see if others would be interested in the idea, ask them to identify any potential flaws you may be overlooking (Clark). Think of ways to build trust (think TrustCloud), work alongside government regulations (when need be) and promote the "access" the sharing economy truly unlocks (Patzsch). With any sharing-based business, trust and community are two of the biggest components that make it work. Transparency and communication are key when building up both (Lee). Entrepreneurs need to be able to move fast, test different approaches, and be willing to adapt as needed (Tran). Tie your business back into the local economy and network (Pollock).
Last but not least – always bear in mind value and scale. You need to generate sufficient value to your customers, create a successful business, and with a fee-based model, you will find very quickly that scale is critical to truly succeed. Good luck!
Raz Godelnik is the co-founder of Eco-Libris and an adjunct faculty at the University of Delaware’s Business School, CUNY SPS and Parsons the New School for Design, teaching courses in green business, sustainable design and new product development. You can follow Raz on Twitter.