Divorcing a Business Model

Image for post
Image for post

The peer-to-peer economy, more ubiquitously known as the ‘shareconomy’, has grown apart and is heading for divorce.

What is the Peer-to-peer Economy

Before we get to the divorce, a short explanation of what the peer-to-peer economy entails: The general premise is redistributed use of underutilised assets by people other than the owners through sale or loan. It seeks to reclaim economic viability for any item which would otherwise be wasted or lay dormant. Simply put it transforms a hindrance into an asset. This has been adopted for the use of cars, spare rooms and more recently has seen the advent of peer-to-peer lending services offering savers higher rates of return than interest in banks account with borrowers receiving lower credit rates. This has witnessed the dawn of car-sharing companies such as Zipcar, whereby you are able to borrow and return a vehicle after a short period of use, and the rental of homes while owners are on holiday through companies such as AirB’n’B.

Image for post
Image for post

Why then is this relatively new business model already heading for divorce? The answer is simple: evolving expectations. The initial humanist element which started off with the best of intentions has matured naturally to a requirement for profit. This leaves elements of the model juxtaposed to their original mission, to bring a more sustainable way of life which saves people money while significantly reducing the impact of waste on the environment. Capitalism, as is often the case, has recognised the paradigm shift that has occurred and monetised the service which some people have argued alters the amount of good which can be achieved. Sure there are companies which have remained true to their principals but those who do so will most likely be replaced by a forward thinking enterprise which uncovers a more economical way of doing things that profit shareholders.

As is often the case, the best way to be successful isn’t to blaze a trail. The true spoils lay waiting for those who can perfect a pre-existing model, evolve it and extract every element of value which has been missed. Trailblazers in their naivety inevitably miss opportunities others recognise and pivot too late to profit from the market they have built. This is the unfortunate and uncomfortable truth being faced up to by those who run companies operating within this sphere.

The Shining Lights

Uber are perhaps the most pertinent example of what I am referring to. Starting out as disruptors to a mature industry, which for too long lay dormant, they have fundamentally changed the entire model of personal transport. They won’t stay there long, though. What started out as a platform enabling people to make money from an asset, their cars, which lay dormant for the majority of the day will return this fact to normality in its quest for further profitability. That’s not a criticism, quite the opposite; it’s recognition of the reality of business. If Uber doesn’t take the next step somebody else will. The next step will be to introduce autonomous self-driving vehicles which deliver passengers to their destination. The cars and the driver who formed the peer-to-peer element will be phased out over time completely divorcing Uber from the peer-to-peer economy.

Image for post
Image for post

The reality of the peer-to-peer economy is that it is an incubator for future mature businesses. Those which become successful will graduate to a different business model.

The peer-to-peer descriptor attributed to companies is a placeholder. The more successful a company operating in this area of commerce becomes the more pressure there is to depart from this ideal. Obviously, Uber above is just an example but it can be taken as a metaphor for the expected development of other peer-to-peer companies. This post-peer world will see the emergence of new trends and business models which will again disrupt the norms which have become standard practice

Ultimately, doing anything a certain way, or adhering to a specific system, because it is the new expected way to do things is the most dangerous thing any business can ever do. This is true even for forward thinking business models like as seen in the peer-to-peer economy. The peer-to-peer economy is headed for a divorce but that’s not necessarily a bad thing. The two opposing arms, the humanist social element and the capitalist profit generating machine, will compete unmercifully to provide the most efficient service to consumers. Competition is an amazing thing which will bring incredible developments to the users who will ultimately decide the victor.

By embracing change and always seeking new, innovative solutions to complex problems we can circumvent the curve and establish new models which continually find ingenious ways to extract further value.

Trends will emerge, business models will change but to remain shackled to a specific model for ideological reasons is suicide. The peer-to-peer economy was always a somewhat disingenuous attempt to humanise and communitise a new masquerading capitalist methodology. Profitability is an essential component of successful business and businesses shouldn’t be ashamed to grow up and make money. Ultimately the consumer pay for the service they feel benefits them best whether that carries the share economy tag or not.

If you liked this article, it would mean a lot to me if you shared it on LinkedIn or Twitter. Want more like this? Follow me on Medium,Twitter or Facebook.

You may repost this article on your blog, website, etc. as long as you include the following (including the links): “This article originally appeared here. Follow @Chris_Herd for more articles like this.”


Written by

CEO / Founder / Coach @FirstbaseHQ Empowering people to work in their lives not live at work ✌️✌

Get the Medium app

A button that says 'Download on the App Store', and if clicked it will lead you to the iOS App store
A button that says 'Get it on, Google Play', and if clicked it will lead you to the Google Play store