I’d like to talk about something very important today: the monumental shift that I believe will be the defining feature of the 2020s and beyond. That shift is the rise of the access economy.

What is the access economy? It’s a term I use to describe a phenomenon we’ve all experienced and that I believe will help define the future, yet is surprisingly un-articulated today. The access economy is what emerges when access to (x) becomes cheap, satisfactory, convenient and reliable enough that the premium on ownership of (x) disappears.  

Note the particular emphasis I’ve placed on the word emerges: the principal reasons why I believe the access economy will become such a defining feature of my generation have less to do with our non-dependency on ownership and more to do with the emergent behaviour that results. We already see examples of this behaviour today: Airbnb, Uber, Netflix, Codecademy, Elance and Starbucks are examples of companies that natively understand this phenomenon, and whose business models work because of their users’ emergent behaviour.

In this post, I’ll be talking about:

-The difference between sharing and access (and why access is bigger);

-What happens when the ownership premium disappears, and why emergent behaviour matters;

-How and why this is happening, and why now;

-What this means moving forward.

1. It’s not the sharing economy: it’s bigger that that.

So what exactly do I mean by the access economy? Doesn’t this sound a lot like the ‘sharing economy’ that everyone is already talking about?

First of all, let’s get thing one out of the way: I hate the term ‘sharing economy’. Why? Because it’s inaccurate, and because it misses the forest for the trees. Consider Airbnb, a highly innovative and successful company that most people would deem a sharing economy success story. But I’ll let you in on a little secret: Airbnb is not sharing. You know what is sharing? Timeshare condos and split-ownership vacation property, which nobody likes. Sharing is what happens when ownership is ideal, but financial concessions are necessary. Airbnb, on the other hand, is a fundamentally different experience from sharing a property. As a host, you’ve monetized an asset that you own (a vacant room in your house, or a vacation property you don’t use all the time) at your convenience. As a traveler, you’ve obtained access to something you need – a place to stay – in a way that is impermanent, yet satisfactory. Sharing implies fragmented ownership, requires compromise and invites conflict; access does not. I’ll sum it up this way: if it feels like sharing, you’re doing it wrong.

Second of all, I find the term ‘sharing economy’ too restrictive, and missing the broader opportunity. One of the underlying principles of access-oriented companies like Airbnb is that individual ownership of things we seldom use, like vacation properties, is highly inefficient. This is quite correct: for example, paying to own, maintain and store a boat that you take out on the lake four times a year is quite wasteful. Correspondingly, it’s not hard to imagine a plausible ‘Airbnb for boats’ business model. And yet, perhaps due to Airbnb’s great success and ubiquitous presence in any sharing economy-related discussion, when we think of new opportunities around sharing they are often natively restricted to ideas where we can imagine a peer-to-peer style, ‘Airbnb-for-(x)’ equivalency.

For example, if Uber, Lyft et al. were being conceived and pitched for the first time today, you’d hear a lot of rhetoric like, ‘Just as Airbnb shows that hosts are willing to offer access to their house as a source of revenue, so too will drivers offer access to their cars’, etc. That’s fair conjecture, and our experience in the real world has shown it to be true: with some exceptions in municipal governments, we love Uber and tolerate a fair amount of their questionable behaviour because they provide a service that we really want. But what actually drives Uber’s growth isn’t any altruistic desire to share, or help reduce traffic congestion: riders want access to transportation, and drivers want the revenue stream- i.e. access to work. Framing the underlying force driving Uber users’ behaviour as sharing rather than as access obscures what’s really going on, and masks the other opportunities out there. To find those opportunities, do yourself a favor: remove ‘Uber for (x)’ and ‘Airbnb for (x)’ from your vocabulary, and replace them both with ‘Access economy for (x)’. When the false ideal of ‘sharing’ is stripped away, the real opportunity often becomes crystal clear.

2. What happens when the premium on ownership disappears?

Spotify, Youtube, Netflix and other streaming media services are among my favorite examples of access economy companies. To see why, let’s travel back in time to 1999 and visit ten-year-old me. Although I didn’t know it at the time, I was about to symbolize an entire generational shift with one click: my first download of a song on Napster. Illegal? Sure. But I didn’t really care, and neither did many. Yet there was a profound difference between my p2p downloading and that of my parents’ generation, or even people 5 years my senior- from the very beginning, my experience of acquiring and consuming media content was based on the premise that access to content should be easy and free.

Fast-forward to 2015: for all intents and purposes, access to media content now essentially is free. Access-based distribution models dominate the media landscape: want on-demand access to whatever music you want? Spotify has got you covered. On-demand access to movies and TV shows? Netflix. On-demand access to time-killing entertainment, with no preconception of what you want ahead of time? Go lose a few hours surfing YouTube. Sure, some of those services require paying a subscription fee, so they’re not truly free. But let’s go back to my applied definition of the access economy: it’s what emerges when access to [media content] becomes cheap, satisfactory and reliable enough that the premium on ownership of [media content] disappears. Streaming has become good enough that the premium on hard ownership has disappeared: there is hardly any reason to purchase media outright aside from personal habits (see: the ‘resurgence’ of vinyl) or peculiar, niche requirements.

Here’s why this matters: ten years ago, if you wanted to watch a movie released on DVD, you had essentially two options: purchasing or renting. Of those two, renting was clearly an inferior option that felt like a concession to cost: there was (appropriately) a premium on ownership. Today, that premium has disappeared: streaming a movie on Netflix isn’t inferior to owning the movie yourself in the same way that renting clearly was. And ever since access to large blocks of content has become cheap, easy and ubiquitous, we’ve seen new kinds of emergent behaviour like binge-watching that weren’t as easy or popular before. Similarly, with the rise of music streaming services we see behaviour like sharing playlists (which used to be time-consuming and effort-intensive) reemerge as naturally occurring social phenomena. (Although I’m too young to have actually made mixed tapes on a real tape deck, I still remember the effort that went into burning a mix CD). When nobody owns the music but everybody has access to all of it, social sharing emerges as natural, pervasive user behaviour. When everyone has access to [x], we use [x] differently.

3. Why emergent behaviour is what really matters

As the cost and inconvenience associated with access to (x) falls to zero, it’s easy to speculate that a natural consequence is for ownership rates of (x) to fall. Although that’s probably true to a certain extent, it isn’t what makes the access economy so interesting. What matters more, as I alluded to before, is the new behaviour that emerges once access to (x) is ubiquitous. This is what drives the sky-high valuations of growth companies, when those valuations seem suspicious when held against a current market size. We recently saw a good example of this: a few days ago, Uber announced yearly revenues of $500 million in San Francisco alone- three times larger than the city’s taxi industry, and still growing at 200% per year. How did SF Uber, which most people still think of as ‘a taxi app’, become 3x bigger than the entire industry it was trying to disrupt in such a short period of time? Because, despite the insistence nearly everyone five years ago, the taxi market turned out to be highly elastic– and user behaviour changed as access became easier.

Uber’s skyrocketing revenue is a nicely topical example of emergent behaviour driving new business models, and it’s easy to see why this matters for fast-paced, innovative startups. But my favorite example of access-driven emergent behaviour is an even bigger company that you’re all familiar with, but isn’t a tech company- and as a matter of fact has probably never been labeled a ‘startup’ once over the course of its existence. That company is Starbucks. From the very beginning, Starbucks’ ambition has been to create the global ‘third place’ in between work and home where people can come together to recharge, to meet for business or pleasure, or to work or read on your own. Their main product isn’t really coffee: it’s access to a warm, friendly, clean environment that anyone can use and everyone will recognize, and access to a small, affordable luxury experience in the form of a personalized beverage.

This may seem obvious now, but thirty years ago it was a strange concept- North America didn’t really have an established ‘third place culture’ the way European or Asian cities did. What’s happened since is extraordinary: just as access to orange mocha Frappuccinos has created an entirely new discretionary food item category, access to a third place has turned us into third-place-users, creating a 60 billion dollar giant in the process. Neither the daily Frappuccino nor the phenomenon of working out of coffee shops really existed here before Starbucks: our behaviour emerged as access to those little luxuries became widespread. What’s neat about Starbucks isn’t that it replaced any established incumbents- it’s the North American coffee culture of shared space and common gathering points that it helped create. Still not convinced? Let me offer this bit of anecdotal evidence: I’m writing this from Starbucks right now, at 11 pm on a Saturday night. The place is packed.

4. How and why is this happening?

There is little doubt in my mind that the access economy is beginning to emerge, and in many ways is already here. But how and why is this happening, and what’s special about right now? The phenomenon of access replacing ownership is not new; in many ways, human social organization and behaviour is based upon the benefits of shared resources. If you’re good at farming and I’m good at building shelters, I can trade you access to my shelter in exchange for access to your food source and we’ll both be better off. Yet the access economy is primed to take off over the next few decades in a way that we could only dream of a generation ago. How come?

The obvious factor is technology: we’re all connected now. I won’t dwell on this too much other than stating the evident: we all carry around smartphones wherever we go, seamlessly connecting resource-seekers with resource-owners – whether they’re other people, as in Airbnb, or a large centralized server full of movies, like Netflix. We don’t have to worry about the physical infrastructure lying underneath, allowing everyone to be connected everywhere- it’s receded into the background all around us, like steel, railroads and the interstate highway system. Yet as much as we marvel at the pace at which technology improves, it’s just an enabling tool. The larger and more fundamental shift that will propel the access economy forward isn’t technological- it’s generational.

The generational shift I’m talking about, which I believe is one of the most powerful and under appreciated forces driving the world right now, is the resurgence of social capital. My views here have been strongly shaped by the book Bowling Alone, a powerful and well-researched book about social capital in America, how it withered during my parents’ generation, and is now making a strong comeback. The main points are: up until the mid 1960s, when my grandparents’ generation was still in charge and the baby boomers had yet to come of age, Americans were incredibly social people. Our grandparents were big ‘club-joiners’: associations like the Rotary Club, Lions, PTA, bowling leagues, and everything in between were swelling with membership, underlying the extensive social ties that linked individuals and communities. Social capital was a very meaningful, desirable thing- and our grandparents knew this. Then, something strange happened- the Baby Boomers rejected this value completely. They moved out to the suburbs and became far more family-centric and inwardly focused (or, really, TV-focused), as community groups and organizations languished. Instead of going to a regular Friday night bowling league, bridge group or town Rotary club, the boomers kept to themselves, and social capital lost much of its importance. (I strongly encourage you to read this book and find out more; it’s been one of the most influential books I’ve read over the past few years.)

Since Bowling Alone was published in 2000, however, something amazing has happened. Social capital is back- and it’s back with a vengeance. We’re all connected now- and in that connectedness, social capital has reemerged in a number of different forms. Whether through interactions on social media such as Facebook, Twitter or Instagram, the implicit social trust contained within five-star user ratings on Airbnb, Uber and Yelp, or simply the rise of the smartphone itself as a social platform, there’s no doubt that social capital is what greases the wheels of the social-driven Internet 2.0. Having grown up instant messaging, p2p downloading and natively interacting with others over the web, my generation is natively comfortable with this new state of affairs. When boomers criticize millennials for ‘fundamentally misplaced priorities’, you’re seeing the clash between a generation that doesn’t value social capital and one that does. Compared to our parents, we’ve devalued ownership of things (like a car, house or steady career) in favor of experiences, social ties, and on-demand access to services when we want them. We’re a lot more comfortable relying on something like public transportation or Uber instead of owning our own personal car, because of the implicit social trust that other people have the same dependence that we do. That comfort – and as a result, that dependence – will become increasingly important as millennials come of age and begin their careers and families. That’s why the access economy is becoming the force that it is, and why it will matter even more going forward.

5. What the access economy means for the future, and why I’m short on ‘my’ and long on ‘use’

To wrap up what I’ve discussed so far:

-The access economy is what emerges when access to something becomes cheap, satisfactory, convenient and reliable enough that the premium on ownership of that thing disappears.

-The access economy is bigger than the ‘sharing economy’: the sharing economy companies we think of today, like Airbnb, are an important part of the access economy but not the only one. It’s not really about sharing, anyway: sharing invites compromise and conflict, whereas on-demand access maximizes convenience and user experience. If it feels like sharing, you’re doing it wrong.

-As the inconveniences of on-demand access disappear, two important things happen. Single-use ownership becomes unnecessary, and restricted to instances of personal preference or habit. And as access to a service becomes ubiquitous, we see new user behaviour emerge: UberSF earning more revenue than the entire San Francisco taxi industry is one example; the rise of social playlist sharing and binge-watching is another. Business models designed around users’ emergent behaviour (like Starbucks) are the ones that win.

-The rise of the access economy is fuelled by two parallel, interdependent forces- the physical connectivity brought on by the mobile internet, and the native social connectivity of newer generations. Millennials are more naturally comfortable with, and dependent on, on-demand access than our parents’ generation.

All in all, what does this mean for the future? We’ll have to wait and see which on-demand services start to gain traction with mainstream markets and which won’t- I won’t go as far as to say that in thirty years our whole lives will be on-demand and we won’t own anything. But I will say this: my overall outlook is short on ‘my’, and long on ‘use’. What do I mean by this? I think the products and industries most likely to be disrupted by the access economy are those where we use the word ‘my’. This could be for things that we possess, but not necessarily: Airbnb has disrupted both ‘my vacation home’ (something you own) and ‘my hotel room’ (something you don’t, but is still ‘yours’ in a way that an Airbnb room isn’t).

Let’s go through a few instances where ‘my’ is already starting to be disrupted by ‘use’:

Little things:

My attic –> I use MakeSpace

My home cleaner –> I use HomeJoy

My music collection –> I use Spotify

My movies –> I use Netflix

My hotel room  –> I use Airbnb

My clothes  –> I use Rent the Runway

Bigger things:

My car –> I use Uber / Uberpool

My office –> I use Breather (or even Starbucks!)

My lawyer –> I use LegalZoom

My bank account –> I use Coinbase

And really big things:

My class –> I use Codecademy

My job –> I use Elance

My doctor –> I use Minute Clinic

A lot of these items- especially the bigger ones, like in education, health care and employment- will probably draw a lot of criticism: “How can you suggest that a retail clinic is as good as having your own family doctor? How can you say that a serious person with real legal requirements would use LegalZoom? Do you really think people will be okay with the lack of job security that comes with on-demand, Uber-style 1099 Employment, rather than a traditional career?” The answer to all of these questions, of course, is that disruption isn’t always comfortable- plus, if you’re someone who already has a family doctor, a well-paying job and sophisticated legal needs, then it’s not really about you anyway.

As the access economy takes off, there are still a few major missing pieces that have yet to fall into place- and when they do, the companies that fill them will win big-time. The first major piece is trust- when online social capital, protected identity and transaction security all matter, how does everything shake out? Facebook is obviously an important player here, as the de-facto owner of our online identities, but in my mind the issue is far from settled (Maybe it’ll be Blockchain-based? We’ll see).

The second major piece is payments. Apple Pay has the potential to be absolutely massive here, and it alone makes me extremely bullish on Apple as gatekeeper and identity-verifier for access economy transactions. But if Apple remains content to own the top 20% of the market and leave the bottom 80% to Android (or someone else), something else will have to give, since those 80% are those for whom the access economy will matter most. Again, maybe this will be Blockchain-based, but I’m not sure. There is no shortage of other strong players – Paypal, Stripe, even Venmo come to mind – and whoever comes out on top will have won a very big prize.

The third missing element, which I think is the most interesting and the least settled, has to do with the way we work. 1099 Employment, if Uber and others get their way, could well be how most of us earn our paycheck in 20 years – and that makes many people uncomfortable. If 1099 Employment goes mainstream, and many of our jobs become on-demand work as independent contractors, we’ll have to start asking some fundamental questions about the nature of work and compensation. What will ‘job security’ look like? How will it affect health care benefits, or retirement savings? If those with work skills can be more efficiently matched with demand for those skills, will ‘9-to-5’ become obsolete? (Once again: if you’re a highly skilled worker with extensive training, like a doctor or an engineer, then it’s not about you.)

If this vision of the 21^st century access-centric employment market comes true, then companies like Zenefits and Liazon will become extremely important: not just managing benefits for employers, but by providing a network where 1099 employees can insure and safeguard themselves. Personal banking disrupters like Prosper and Lending Club will grow in importance, as the ability to borrow and secure credit will become interconnected with our livelihood as independent contractors. And as 1099 Employement expands from lower-skilled work like driving cabs to higher-skilled tasks like design and sales, vocational training will shift towards rapid preparation of broadly skilled, situationally flexible workers for specific contracts. The premium on ‘owning employees’ will disappear, and the ability to quickly teach any smart contractor the skills they need for a specific task will emerge as a new force.

6. In conclusion

“I very frequently get the question: ‘what’s going to change in the next 10 years?’ And that is a very interesting question; it’s a very common one. I almost never get the question: ‘what’s not going to change in the next 10 years?’ And I submit to you that the second question is actually the more important of the two – because you can build a business strategy around things that are stable in time… in our retail business, we know that customers want low prices and I know that’s going to be true 10 years from now. They want fast delivery; they want fast selection. It’s impossible to imagine a future 10 years from now where a customer comes up and says, ‘Jeff I love Amazon, I just wishes the prices were a little higher [or] I love Amazon, I just wish you’d deliver a little more slowly.’” – Jeff Bezos

I hope that in this post I’ve convinced you that the access economy will be a big deal, or at least that it’s something to which you should be paying attention. But as Jeff Bezos reminds us, when making big predictions about the future, what’s often most important is what stays the same. The way I see it, I think there are a few fundamental aspects of human nature that aren’t going anywhere:

-We always want more, while giving up less.

-Instant response is preferable to delayed gratification.

-We like options, and hate liabilities.

That’s the access economy in a nutshell. And I’ll bet that’s where we’re headed.