Fresh off its $1 billion valuation, Airbnb is the most common reference point for all manner of “this for that” pitches bouncing around the Valley right now, with many new ventures proposing to be the “the Airbnb of X.”
But Airbnb is only one species of the sharing economy genus — a genus that will stratify over the next few quarters.
Real-time makes your brand a hero
Hotel Tonight is a great example of the flip side of the Airbnb coin. It focuses on real-time reservations, and the real-time use of latent capacity.
Airbnb’s transactions typically take place five or more days in advance of a stay, and any requests inside that window are put on a standby list. In contrast, Hotel Tonight only offers rooms for the current night, with a cutoff of 2 a.m. local time. It’s a fascinating constraint, and one that has propelled their business forward. When people need a room immediately and you’re able to provide them one, they will remember you.
Real-time can command premiums, not just discounts
Of course, different markets and different kinds of capacity have unique sensitivities to time.
Uber’s car service business is incredibly time-sensitive. One of its most common use cases is trips to and from the airport, which usually involves a high-stakes deadline on at least one end of the journey.
Other popular uses are travel on a busy holiday (think Halloween or New Year’s Eve in New York City during a public transportation strike).
The more time-sensitive a market becomes for buyers and sellers, the more lucrative the corresponding business opportunity.
This is an old lesson — price and revenue optimization wizards hold time in the highest regard. And as the time-sensitivity of a situation increases, the number of parties we’re willing to entrust with our affairs dwindles to a small handful.
Real-time puts coveted data in your pocket
What Hotel Tonight, Uber and my company LiquidSpace have in common is that we all know a lot about our customers’ travel patterns.
Additionally, we can extrapolate a ton of information about preferences — from who customers are likely to collaborate with to where they like to work or hang out.
With this real-time data, we’re primed to find other ways to make your stay, ride or meeting that much more enjoyable. We can quickly provide add-ons that customers need, such as snacks or printing, or partner with other vendors who can.
Whether by offering new services or opening up this powerful real-time data, we are exposing new revenue streams that the sharing economy enables.
With enough time, any latent capacity can be utilized. Each year at South by Southwest in Austin, Texas, we see twelve month’s worth of planning make use of every nook and cranny.
On short notice, sharing economies are harder to organize, and they involve more risk. Real-time capabilities mean that you sit closer to purchasing decisions, closer to strategic imperatives, closer to profit and loss, closer to sealed deals and averted crises.
Real-time is difficult, and precisely because it is so challenging to do real-time well, and safely, the market will reward those who invest in making the “here and now” a priority. In short, you’re closer to risk, and closer to reward.
Consumers want real-time access, and businesses demand it. The sharing economy is not only online, it’s also picking up speed.