(Photo by CBN)
In the early 20th Century Henry Ford changed things forever. He combined moving assembly lines with mass labor to make building cars cheaper and quicker. This essentially turned a luxury item into a transport mechanism for the masses. Today, this is happening all over again with not one industry, but many.
Entrepreneurs all over the country are bringing together cheap computer power with freelance workers to supply services that were once reserved for those industries with little or no competition and/or luxuries for the wealthy.
Uber supplies on-demand chauffeurs. Another company now provides on-demand cleaners. Another startup keeps your fridge stocked while yet another new startup will deliver on-demand meals and delivery services. In all cases, these companies use freelancers, not hired staff.
This quick and rapid rise of on-demand services is disrupting businesses who are being struck from behind with a heavy blow, because it’s happening fast and the venture funding is there to help these companies go from zero to full operation very rapidly.
As a great example, Uber disrupted an industry that was thought untouchable. They were founded in 2009 and now operate in 53 countries with sales exceeding $1 billion and in 2014 they had a valuation of $40 billion. They connect people with freelance drivers and do so in a way that cabs simply cannot compete with fast enough.
We, the consumers want this. We want faster, better, more convenient and something that fits into our busy lives. Our attention spans are decreasing and we have technology that can deliver us services when and how we want them.
Note to all those businesses who aren’t thinking of how they can change to accommodate the new sharing economy: start thinking about this NOW.
There are two main forces driving the new sharing economy. The first is technology. We have cheap computer power that gives nearly anyone with a home desktop the ability to do almost anything imaginable. Complex tasks can now be farmed out to anyone around the world and the Internet gives us unlimited resources we can tap into and utilize. With technology, Uber got people to rent their own cars and gave us the ability to find those people and pay for a ride.
The second driving force is changing social habits. The world is rapidly being divided between people who have money but no time and people who have time but no money. This new on-demand economy provides a way for these two groups to do business with each other.
While we are seeing success explode with new on-demand companies and freelancers, there are major issues being taken up in the court systems. Not a day goes by when we don’t hear about Uber being sued or running into issues. The business world is grappling with how to handle a company that uses freelancers to disrupt their model and take customers away.
There are other issues as well. Employment laws and legalities, questions of ethical behavior, etc. etc.
The real issue is business disruption and fear. Businesses fear this new world because it breaks down barriers to entry and it challenges them on many levels. Entrepreneurs, on the other hand, are creative and see opportunities to provide better services because they can bring technology and talent together to offer what consumers want.
Will companies like Uber be driven away (no pun intended)? No. They won’t. We will battle this in the courts until it’s ironed out. There will be industries that lose and there will be industries that are formed.
Bend, Oregon is not immune to this new sharing economy. We have a huge entrepreneurial spirit, a lot of freelancers and several decades ahead of growth. It’s only a matter of time before we begin to see the first signs of new on-demand services right here. The question businesses should be asking is how they can be entrepreneurial and adjust their services to take advantage of the two forces driving the new on-demand services: technology and social habits.
If you would like to comment on this article, I’d love to hear your thoughts on this entire topic. I have a post about this and you can feel free to share your thoughts: https://www.rewiredigital.com/welcome-rise-demand-company/