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From Jelly to Uber -- Building Out the Sharing Economy

By James Poulos – Jan 16, 2014 at 8:25AM

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From cars to clothes to practical know-how, the new generation of startups is creating the framework for transactions that leave customers better off, but without any more stuff. And this is just the beginning.

Get-rich-quick schemes are usually just that: half-baked plans that amount to nothing (or worse). Unless you're extremely talented, ambitious, and lucky, it's an extraordinary challenge to amass a pile of money in short order.

But in a disrupted economy, market opportunities can arise that better the odds. Jumping headfirst into those opportunities doesn't guarantee newfound wealth, of course. But it does generate the kinds of possibilities that can lead to some smash business hits.

Take the burgeoning field of enterprise going under the name of the "sharing economy." In a nutshell, it's a shift from buying to renting when you need it.

Last year, The Economist explained how, on the Internet, "everything is for hire:"

You might think this is no different from running a bed-and-breakfast, owning a timeshare, or participating in a carpool. But technology has reduced transaction costs, making sharing assets cheaper and easier than ever—and therefore possible on a much larger scale. The big change is the availability of more data about people and things, which allows physical assets to be disaggregated and consumed as services.

Hence the sudden rise of companies like AirBnB and Lyft, where peer-to-peer exchange starts on the Internet and extends into the very real-life world of your personal living space and your personal car.

Companies can get in on the act, too, however. enables women to "rent designer dresses and accessories for a fraction of the retail price" -- breaking down yesterday's luxury lifestyle into episodic experiences almost anyone can enjoy a la carte.

Uber, which bills itself as "everyone's private driver," essentially matches peers who want to travel comfortably as they gather, supplying the transportation to one half of the match.

A sharing-economy bubble?

Don't think this is just another bubble or fad, though. When it comes to the assets that the sharing economy disaggregates -- and the people it aggregates to do it -- someone needs to be doing the disaggregation on one end and the aggregation on the other. That's a huge amount of workflow. And it's no surprise that it's attracting the attention of some of the biggest names in tech.

Twitter (TWTR) co-founder Biz Stone, for instance, has now launched a sharing-economy app called Jelly. As the San Jose Mercury News reports, the idea is to catch practical, real-time advice up to where search and crowdsourced news have gotten:

While websites like Quora have taken off in recent years to help users get questions answered, Stone says he focused on photos and location -- "the things that make mobile mobile'' -- to help users get real-world answers fast.

"We're not asking, 'What's it like to be in jail for 20 years?'" he said in a gentle dig at some of the philosophical meanderings of many Quora users. "It's, 'How do I set up my TiVo? Here's the back of my TV.'"

Where's the valuation come from? Well, people asked the same thing about Twitter.

Problem-solving for hire

But unlike Twitter, Jelly fully engages in the sharing economy. On Twitter, users share facts, opinions, and entertainment. On Jelly, users can share problems and solutions.

That's not just good for peer-to-peer transactions on an ad hoc, a la carte basis. That's a new way people in formal or informal professional collaboration can work together, instantly and remotely, in real time. Until now, businesses have been restricted to "conversational" communications apps, like Yammer, to make text-driven collaboration virtual.

Jelly allows images to work together with text to allow us to work together in a more efficient, consequential way. When businesses begin to use Jelly and similar apps to coordinate their work from afar, their increased valuation will trickle up. That's a powerful innovation hiding in plain sight -- maybe not $40 billion, like Twitter, for a number of years, but probably hundreds of millions in a few.

Just one great idea...

One more cool thing about the sharing economy: it scales upward and downward. You don't have to be a Silicon Valley billionaire to get in the game. You don't have to be a hipster in a hyped-up, gentrifying neighborhood. You do, however, have to think creatively about which experiences are useful enough to attract customers, and special enough to inspire them.

Now, the critics point out correctly that the sharing economy is not a bonanza for everyone. It's not going to solve the unemployment crisis. In fact, it's going to shake up the big, comfortable players in more than a few industries -- from travel, dining, and software to tuxedo rentals and baby superstores.

After all, it's based on the idea that much of what we buy we really want to use for a while, not own forever.

Soon, you'll share a car to a destination wedding, share formal wear when you arrive, eat a restaurant-quality rehearsal dinner in your host's own home, and gift them a certificate for a crib-recycling service.

Companies could lose big, or lose it all -- unless they find a way to deliver a better-quality experience (as restaurants sometimes do), hardwire themselves into governmental regulatory regimes (as we've seen with taxis), or get out front of the sharing mentality themselves.

And in some circumstances, it's possible to maintain a traditional business model while making some concessions to sharing (often in the form of family plans), as Netflix and carriers like T-Mobile have done.

On the whole, though, the sharing economy works so well for so many people -- on the level of production, consumption, and investment alike -- that you should expect the pattern set by Lyft and Jelly to expand throughout much of the economy as a whole.

Fool contributor James Poulos has no position in any stocks mentioned. The Motley Fool recommends Twitter. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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