‘Sharing Economy’ Companies Like Uber And AirBnB Need To Start Getting Political

Last November, the people of San Francisco voiced their support for the sharing economy — or at least their distaste for a particular type of regulation — by voting down Proposition F.

This proposition was ostensibly designed to address San Francisco’s well-documented rent crisis. However, it would have hobbled short-term rental companies such as Airbnb by limiting vacation rental days to 75 per year and strengthening the city’s enforcement power and penalty fees.

When faced with regulations that could potentially cripple its business in San Francisco, Airbnb did what it believed it needed to do: It went political. Governmental bodies are finally catching up with the sharing economy, and incumbent competitors are using their clout to make the law work in their favors.

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How Scrappy Startups Are Battling Corporate Juggernauts

The past few months have brought a trend of consolidation in the enterprise space.

In response to the explosive popularity of agile startups like Slack, many enterprise giants have been consolidating power and influence to keep their holds on the industry. On one end of the spectrum, companies like Red Hat and Microsoft are forming strategic partnerships to knock out impending competition on key platforms. Meanwhile, companies like Oracle have been purchasing startups in attempts to subsume their services before these smaller fish grow to take over the pond.

The true motivation of these large companies is clear. Behind these drastic moves is a concentrated effort to stem the growth of startup competition and stop the disruption of this once securely held industry. However, startups can take steps to ensure they remain not only competitive, but also ahead of the curve.

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Is the Sharing Economy Messing With Your Wealth?

In his recent piece for Time magazine entitled “How the Sharing Economy Is Hurting Millennials,” Reid Cramer concludes with a rather grim statement: “It is our collective responsibility to make sure the emerging ‘share economy’ doesn’t leave Millennials completely devoid of wealth.”

Cramer isn’t anti-sharing; in fact, he’s impressed by Millennials’ ability to reap the collective benefits from expensive, individually owned assets such as cars and homes. What concerns Cramer is that, in this new world, fewer young people own such assets. He points to the fact that “Millennials are lagging behind previous cohorts in their rate of homeownership” as an indicator of “growing generational inequality.” According to Cramer, this lack of assets is shunting Gen Y into a spiral of downward mobility.

As a Millennial, I appreciate Cramer’s concern for my financial security, but I find it a bit misguided, especially in an economic environment that is still feeling the effects of the Great Recession.

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The Hub and Spoke Model: The Future of the Marketplace

Marketplaces used to take a horizontal approach to transactions. It was all about quantity and servicing as many people as possible — regardless of demographic or industry. Craigslist is the epitome of a horizontal marketplace. The same can be said for Amazon. Both titans provide goods so diverse and expansive that they’re able to meet the needs of almost anyone.

But therein lies the problem. With such diversity in goods, it can become difficult to find what you’re looking for. And when you do, you’re not quite sure whether you’re getting those goods for a fair price — not to mention all those uncertainties involving quality and dependability. In other words, horizontal marketplaces lack the depth necessary for a quality purchasing experience.

It’s time to start thinking vertically. This is where concepts like the hub-and-spoke model come into play.

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Sustainable Capitalism Is the Next Big Thing in Investing

Rather than equate social impact projects with poor returns, investors who are willing to take the long view can enjoy handsome profits on sustainability initiatives. Many investors became accustomed to fast, high returns after the rapid rise of companies such as Facebook, Snapchat and Instagram. But the Generation model requires more patience because socially conscious companies take longer to reach similar levels of success.

Large-scale disruption will rely on big investment firms because small venture funds can’t commit the kind of capital that social projects demand. Big-time investors need to step up on these opportunities, and evidence already exists that, if they do, they’ll do well.

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