in

95: Equity

e Killed It (Fast Company)
Forget Renting. This Is the Next Big Thing in the Sharing Economy (Inc.)
The rise of the sharing economy (The Economist)


Full episode text

Around 2010 or 2011, news sources such as Time, Forbes, and The Economist started writing excitedly about what they called “collaborative consumption” or the “sharing economy”. The idea was that you shouldn’t really need to buy a power drill – you should be able to share a power drill for the few minutes that you need it, and then pass it along to the next person that needs it.

The so-called rental economy was supposed to be the newest model for an economy where sunk costs and the costs of ownership seemed far too high.

Yet, by 2015, Fast Company was writing that the sharing economy was, put simply, dead. A few sharing startups had developed into full-blown businesses. The successful ones are in many ways are the ones where ownership is not so much shared as rented.

Shared or not, when it comes to some of the biggest purchases of our lives, not purchasing is a choice that more and more people are making. For some, it’s because of a crushing loads of debt – for others, lifestyle choice.

Do the math, and renting can be the less expensive choice in some situations. However, it’s important to consider both the monetary costs, as well as the time, effort, energy, and convenience factors of not having immediate access to something.

For homes, buying may mean that there’s equity to be built and security to ideally be had. For a vehicle, it may be a factor that you just can’t get to a car quick enough if you actually need it.

The rental economy has a lot of promise, and in the last five years the excitement has worn a little bit thin in some places. You may not always need a drill, but when you do, it’s a matter of how long you’re willing to wait and how much coordination you’re willing to do to get one for that five minute job.