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Raz Godelnik headshot

Hillary Clinton vs. the Sharing Economy?

By Raz Godelnik

On Monday, while the world was waiting for a word from Geneva, where the negotiators were about to announce on the agreement with Iran, the eyes of the sharing economy were focused on The New School in New York.

The reason was an economic speech from Hillary Clinton, in which she was expected to address the sharing economy for the first time. And indeed the Democratic presidential candidate did exactly that, offering the following observation:

“Many Americans are making extra money renting out a spare room, designing a website ... even driving their own car. This on-demand or so called 'gig' economy is creating exciting opportunities and unleashing innovation, but it's also raising hard questions about workplace protections and what a good job will look like in the future."

Clinton’s remarks received a lot of media attention, but the discussion was mainly either politically-oriented (for example, how it could it impact her relationships with Silicon Valley), or recycled the talking points in the ongoing debate on whether the sharing economy generates good jobs.

I’d like to add two more points to the discussion on Clinton’s remarks, including my two cents on whether she is right or wrong in her critique of the sharing economy.

Problem: The Uberization of the sharing economy

Two weeks ago I wrote here about the tension between value-based and values-based approaches in the sharing economy. While this tension doesn’t seem to be going away anytime soon, it’s also important to make it clear that, at least in the U.S., there seems to be a clear winner in the ‘fight’ between these approaches – the former.

More specifically the Uber model seems to be winning, as the endless list of on-demand companies copying the Uber model and the long list of startups wishing to become “the Uber of __________” (complete the blank for your industry of choice) indicate.

The result is what I call the Uberization of the sharing economy. Or, in the words of PandoDaily’s Sarah Lacy: “Uber IS the sharing economy.” Lacy referred to Uber’s magnitude and impact, but I believe it’s also true in terms of becoming the dominant business model in the sharing economy.

The latest example is of course Clinton’s speech, where she referred to the Uber model as representing all of the thousands of companies that are associated with the sharing economy. (It’s true she mentions other services, but they all apply the Uber model one way or another.) In other words, now the Uber model and the sharing economy become synonymous, so it’s Hillary versus the sharing economy, not Hillary versus Uber.

What’s wrong with the Uber model? It’s a fair question as, after all, this model succeeded to create a stellar user experience -- taking the friction out of the taxi-riding experience and delivering great value for its customers. However, this model reflects a flawed design that has two parties in mind -- company and customers, while the Uber business model actually includes three parties – company, service providers (drivers) and customers.

The result is a broken relationship, especially between the drivers and Uber and the drivers and customers. One Uber driver described the relationship with the company as follows: “You’d be hard-pressed to find Uber drivers with warm fuzzy feelings about the company. We are providing the services, but we are the worst paid and least respected. Travis [Kalanick] is the hero and the drivers are just peons.”

These conflicts seem to get only worse with other sharing economy companies that copy the Uber model, aiming to provide a seamless service for the users, not to create peer-to-peer relationships. As a result, humanizing these experiences becomes part of the friction that should be eliminated. This is a recipe for dystopia. These sharing economy services aren’t enhancing relationship between people, but actually eroding them.

Solution: Bottom-up innovation that's supported, not driven by, regulation

“As president, I will work with every possible partner to turn the tide to make these currents of change start working for us more than against us, to strengthen, not hollow out, the American middle class. Because I think at our best, that’s what Americans do. We are problem solvers, not deniers. We don’t hide from change; we harness it.”

Hillary Clinton doesn’t have a solution to the problem she presented. She’s not alone. Ending the Uberization of the sharing economy is not an easy task and requires offering better value for the companies, for the service providers and for the customers.

I don’t believe this solution could be driven by regulation, as top-down solutions usually don’t include innovation. The solution should be a bottom-up one driven by a new model that, as I’ve mentioned here before, will create and sustain mutually respectful relationships between these parties.

Will it be a worker cooperative? A Silicon Valley VC-funded startup? I don’t know, and it probably doesn’t matter too much. What matters is that the new model that will win over the Uber model will be based on a better design and vision, integrating usability and desirability with what Cameron Tonkinwise described as “economic relations that have a social thickness to them.”

What does this model actually looks like? I’ll share more details with you in the upcoming weeks.

Finally: Was Clinton right in her critique of the sharing economy?

I think Clinton’s critique on the Uber model is an important addition to the conversation we already have about the sustainability of this model. Somehow a dichotomy was established between providing customers with a stellar user experience and providing service providers with decent working conditions, and it’s time to show this dichotomy is false.

This conversation, driven so far mostly by service providers, media (see here and here) and the judicial system (see here and here), is important as it already started changing the dynamics of the Uberization trend with companies like Instacart offering some of their workers to become employees.

With greater exposure provided by people like Hillary Clinton, there is a good chance to change the current dynamics even further -- creating a new iteration of the sharing economy (the great economy?) that will be great for everyone involved, including the people that actually make this ‘magic’ happen – the service providers.

Image credit: VDCPIX.com, Flickr Creative Commons

Raz Godelnik headshotRaz Godelnik

Raz Godelnik is an Assistant Professor and the Co-Director of the MS in Strategic Design & Management program at Parsons School of Design in New York. Currently, his research projects focus on the impact of the sharing economy on traditional business, the sharing economy and cities’ resilience, the future of design thinking, and the integration of sustainability into Millennials’ lifestyles. Raz is the co-founder of two green startups – Hemper Jeans and Eco-Libris and holds an MBA from Tel Aviv University.

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