Waste not, want not. Growing up, I thought of this adage as a call to avoid waste, a moral responsibility to reduce environmental impact. But what if I told you that there is a movement that thinks of "waste not, want not" as a way to profitably leverage limited resources and create new value from previous waste? That is Collaborative Consumption in a nutshell. The Collaborative Consumption panel at the Wharton Social Impact Conference showcased three innovative companies reinventing the business models for consumer product and service delivery.
On Friday November 15th, three New York entrepreneurs showed an audience of entrepreneurs and businessmen just how they have made use of underutilized assets, including skills, time, and physical goods, to turn a profit. Skillshare, an online teaching platform, has opened global access to top quality teaching. With ClosetDash, an ex-trader has created a new level of market liquidity for used clothing of high quality. Even time waste has been captured from the economies of scale of cooking with Mealku, which delivers home-cooked meals.
By definition, these business models benefit from a network effect and have been cleverly designed to welcome new network members. One common theme across all the models is the ability for everyone, regardless of offering, to engage. Skillshare's two-sided market has democratized access to world-class training. ClosetDash and Mealku both allow contributors to earn points that can be spent in the system instead of cash. By removing income as a constraint, the businesses increase their market size and network.
These dynamic models are drawing reactions from traditional businesses. Retail companies like H&M and Marks & Spencer's have begun reward customers for swapping old clothing with coupons. Google has also entered Skillshare's market with the launch of Helpout, its new video instruction platform. John Wiseman of Skillshare noted that institutions that are fighting the trend are losing, as demonstrated when the lawsuits against Airbnb gave the company more notoriety. Ted d'Cruz-Young of Mealku, a classically trained economist, agreed that the current economic model is broken and that companies will need to adapt or lose out. Panel Moderator Melissa O'Young of Let's Collaborate! supported this view in highlighting the market impact of collaborative consumption today: in 2013, the sharing economy is projected to generate more than $350 billion revenue in transactions, with a strong growth outlook.
Not only is the sharing economy winning, but it is also delivering social impact. Hundreds of Skillshare teachers have earned five or six-figure incomes this year alone. Numerous clients have received job offers on the basis of products from Skillshare classes. ClosetDash has taken over 11,000 pieces of clothing which otherwise could have ended up in the landfill. Further, purchasers saved thousands of dollars, helping reduce personal credit card debt, a salient concern for every US household after the financial crisis. Mealku has not only enhanced personal incomes but also improved local relationships and accountability; not one meal in the thousands delivered has resulted in food related illness, a standard well above typical commercial food establishments.
As Mr. d'Cruz-Young put it, the question is not what other industries can Collaborative Consumption go to, but what can't it go to. All of education, food, and much of transport have already seen penetration. The 19th century economic model that pervades many industries is no longer fit for purpose. Jennifer Lee of ClosetDash agreed that in any space with social or environmental impacts, Collaborative Consumption will make the industry more efficient. Mr. d'Cruz-Young noted one topical industry that is due for an overhaul: health care. Just imagine: less waste, less want, at a profit.
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