I had the honour of hosting a panel at the amazing Tech Open Air festival last week. The name was “The Truth About P2P” and the speakers were Tegan Monique Gaan from Gigit, Johannes Reck from GetYourGuide and Oliver Bronner from Stylemarks.
P2P and collaborative consumption experienced an incredible hype in 2010 and 2011, with Techcrunch comparing it to the industrial revolution and the Harvard Business Review declaring that “it’s a socioeconomic groundswell that will transform the way companies think about their value propositions—and the way people fulfill their needs.”
Two years later, we’re pretty far away from that. Even though AirBnB is on track to generate $1 Bn in turnover this year, the only other company that has been able to scale a P2P model since then is carpooling.com. Taskrabbit is lingering at 10,000 MAUs and Getaround has pivoted to a model where it manages cars that are unused for 6+ months.
Johannes confessed that originally Getyourguide was a failed P2P marketplace for activities. They realised that the marginal costs for providing a service are high compared to offering an asset. If you want to offer a walking tour through Berlin you still have to get up and spend three hours walking around the city. If you want to rent out your couch you just need to take a photo and create a listing on AirBnB. The value of your couch is dormant but already there but for a service you have to create the value every time.
So it seems that P2P marketplace for services will have a hard time because economies of scale matter and professional operators are much better at creating them.
On the other hand, carpooling.com is a company that has been able to scale the service P2P model successfully. This is most likely because the marginal costs of giving someone a ride are very low.
I made a visualisation that represents the above and might serve as a framework for evaluating P2P models.
Other points that came across in the discussion:
As any other marketplace, the most important challenge still lies in creating liquidity. It’s an absolute must.
Tegan and Oliver pointed out that curation can be crucial. Especially for market places with higher value items, an editorial selection matters to protect the brand.
Generally it can be easier to start with a pure P2P model because the sharing economy is a PR darling. But that is hard to scale (due to the reasons above). Even on AirBnB the largest volume of rentals now comes from “semi-professionals” that rent out several apartments full time, and ebay is dominated by power sellers.
I talked about this in a separate conversation with Adam Smith and he added an interesting point: P2P marketplaces enable small operators to leverage marketing for distribution and verification mechanisms to generate trust from users in a way that they can now compete with big brands. This has the effect that economies of scale are kicking in at lower volumes than before. So a semi-professional operating 5 apartments on AirBnB can now compete with a hotel in terms of marketing and brand.
So, if you’re thinking about starting a company with a P2P/collaborative consumption model, the most important thing is to look for low marginal costs required to provide the asset/service.
