If you are a future-oriented thinker with an instinctive preference for disruptive ideas, then you were probably like me and geeked out hard when the sharing economy first came into existence. This crazy idea that we could collaboratively share, swap, rent, barter or trade just about anything in a friendly, neighborly way felt like the magical beginnings of a next chapter in our society. From couch surfing, to crowd funding, to dog sitting, to bike swapping – the sharing economy has tectonic implications for our economy. What’s most interesting to me about the sharing economy though, is that it breaks down connection barriers between people and actually strengths our social trust. After all, the sharing economy simply doesn’t work without trust.
Social trust is a belief in the honesty, integrity and reliability of others – a “faith in people.” – Pew Research Center
There are lot of awful shootings and attacks we hear about in the news these days, so it’s important there are counter forces out there that re-equilibrate us, and heal those lesions to our social trust. Fear is driven by stories – some true, some fantasized – and if we live in fear that our hometown might be the scene of the next shootout, we go on alert, and grow suspicious of everyone around us.
These handful of tragic events are incredibly damaging to our faith in society, our trust in others, and our openness to strangers. We need a greater bank of second-hand stories and first-hand experiences that help us put things into perspective. That’s what the sharing economy does. The sharing economy has grown so much in the past five years, that it’s hard to have not heard a story or two about strangers staying in strangers’ homes (Airbnb), locals catching rides with other locals (RideShare), or busy parents arranging for errands to be run by a task-master (Task Rabbit). And most the time the story goes, “Yeah at first I was wary about it, but you know, it actually turned out great.” And the more these stories get handed down, the more we start to change our perception of engaging with and trusting strangers. And then when we try it for ourselves, we realize: “Hey, it’s not so bad.” In fact, sometimes it’s a surprisingly wonderful experience because there’s a sense of camaraderie and equality in the encounter, instead of the formality that comes with traditional services (clear delineation between service provider and customer).
I once heard an analogy about relationships that you always want to be finding ways to make small deposits in your trust bank, so that when you go through challenging, taxing times, that you have enough saved up to weather the storm. And when you aren’t in hard times, there’s a surplus of wealth that you get to enjoy. Societal trust works the same way. The sharing economy is automating the deposits in the trust bank, so that when awful tragedies strike (rape, shootings, murder), there’s still an abundance of trust capital in the fellowman that gets us through the dark times.
Interestingly, trust is not only an output of the sharing economy, but also a necessary input for it to work. Rachel Botsman said in her fabulous TED talk that trust is actually the new currency of the future economy (the sharing economy is expected to hit $335B in value by 2025). But if trust is the currency fueling this powerful growth engine, how do we generate trust to begin with? Put concretely, how do we start trusting random strangers enough to stay in their homes? And how did it happen at such a scale that Airbnb is now a $10B company? Turns out, technology solved this on behalf of the sharing economy by mimicking the interactions that used to happen face-to-face, but on a massive scale.
Those hand-me-down stories are a part of it – they loan credibility. But to get motivated enough to experience the social economy for the first time (and muster the confidence to trust a stranger), we’ve got to know we’re dealing with an honest person on the other end. And without being able to shake their hand, look them in the eye, and read their body language, we need someone to vouch for them. That’s were reputation capital comes into play: reviews, timeliness ratings, satisfaction scores, etc. These are all signals that tell you how much you can trust someone else.
In her TED Talk, Rachel talks about this cool future state where one day we will actually have a Reputation Profile, that aggregates all the data across the web to give a consolidated picture of your trustworthiness. This means, if someone is considering whether to host you or not in their Airbnb home, they’d visit your Reputation Profile, and be able to see the glowing ratings from your Etsy customers, your impressive 100% on-time delivery stats, and the hard-to-earn Google Trusted Stores seal on your site. They might then think, “If you’re an honest businessman, you’re likely a trustworthy guest.” Et voilá: trust unlocked. A powerful reputation aggregator truly becomes a social currency, and could actually one day replaces credit ratings, because it’s a better predictor of trustworthiness and follow-through on your commitments.
Rachel talks about this Reputation Profile as a thing of the future decade, but just the other day I got an email from my friend who used to work at Airbnb who asked me for some feedback on the startup she’s now at: Karma. I quickly discovered that they are realizing Rachel’s dream and creating the first aggregate Reputation Profile.
This is a huge win for the sharing economy. Why? Because the sharing economy model goes: little bit of trust in (to facilitate the first transaction between people), and a whole lot of faith, trust, confidence out (once these people become active participants in the economy). The Reputation Profile helps generate that initial seed round of trust. My generation, Gen Y is rapidly adapting to the sharing economy, but Reputation Profiles will help adoption across the Gen X and Baby Boomer generations.
As the sharing economy grows towards $335B, it will and help raise social wealth and living standards for all of us. More importantly however, it gets us back to a stronger civil society, where we start off believing that people are generally good, neighbors can be trusted, and we’re safe to open our hearts to trustworthy people.
At its core, the sharing economy is about empowerment. It’s about empowering people to make meaningful connections, connections that are enabling us to rediscover a humanness that we’ve lost somewhere along the way, by engaging in marketplaces like Airbnb, like Kickstarter, like Etsy, that are built on personal relationships versus empty transactions. – Rachel Botsman