We’ve gotten used to Uber and Airbnb, and the sharing economy they encompass – but this mindset of access instead of ownership is spreading its wings and landing in all sorts of industries.
This week on CEO Exclusive, I’m excited to welcome Josh and Tom Nickell of Nickell Equipment Rental. I would never have thought that the shared economy would come to construction and landscape care, but it has. As our population continues to recover from the 2008 recession, and Generation Y comes of age, the idea of ownership as an American birthright continues to decrease, and shared economy is finding new footholds in all areas of our economy.
What is Shared Economy?
It’s a shifting definition, so for those that need a quick tutorial, a shared economy is a collaborative economy based on the idea of shared resources. When the idea was first birthed, not long after the recession, there was a lot of talk about power drills. Yup. Power drills. They were everybody’s favorite example.
It goes like this: The average power drill gets used about 12 minutes per year – so why buy one when you could pay less to rent one from your neighbor a few doors down? A multitude of websites sprang up with the mission of connecting you with your neighbors, or more importantly, with their stuff. Problem was, it was more trouble than it was worth. Drills cost $30 on Amazon, and renting one from a neighbor for $15 wasn’t worth the hassle of pick up and return, or the even larger hassle of having to (gasp) interact with your neighbors. So, most of those websites went out of business. The ones that survived went to a more old school rental model (like Rent the Runway) where you rent from a warehouse, not your neighbors.
Some services that still have us accessing other people’s property have survived, such as Uber and Airbnb, but those are competitive based on price and convenience, not good-hearted sharing. They also depend heavily on technology for their success. Without easy to use apps, neither business would be in business.
This move away from actual sharing and towards convenient and inexpensive increased access has led people to argue that the economy should be called an “access economy” instead of a “shared economy”. I like “shared”, so we’re going with that. But, you get the idea. It’s about having access to more stuff for less money, and feeling a bit non-material in the process. Who wants to be bogged down by all that stuff anyway?
Where and Why are we Sharing Now?
This is the part I find most fascinating. It’s showing up everywhere. While the focus in the shared economy has truly moved away from borrowing your neighbor’s power drill, the overall societal norm of owning less stuff, and yet accessing more, has taken a strong hold.
In Europe, people already rent more. Josh explains that in Europe 80% of all construction equipment is rented. In the U.S. it’s more like 50%, but it’s growing fast, in great part due to the shifting societal ideas about ownership. Nickell Equipment Rental is in place to ride that wave, and ride it well.
“In the United States,” says Josh, “We’ve always been an ownership economy. So we want to own our house, we want to own our car, we want to own our equipment on a jobsite, and particularly, with the millennials, that’s starting to change.”
This article from Forbes.com says the changes are here to stay. “Built on the focus on sustainability, and doing more with fewer resources, partially to help the environment, but also tied to recent economic downturns that taught consumers a few lessons about saving, the sharing economy is a growing trend that could stay with us for the long-term.”
Another Forbes.com article attributes the economic changes to a shift away from the focus on ownership. “In the last century, owning things was the marker of the middle class. Those who had more money could own more things. But as manufacturing became less expensive, the barrier to owning a great deal of stuff was lowered. Today, many people living at, or below, the poverty level own plenty of things, but it isn’t a good indicator of their relative wealth.” For millennials, there seems to be a trend of owning less stuff. Some of this is due to the minimalist movement, but much of it is simply due to the increased access to digital content and sharing.
In the construction industry, it was the recession that changed things. Tom says that the recession humbled people. “Once the recession hit and it was so bad, most people decided…I’m not going to put that on my balance sheet anymore. I’m not going to take on that kind of debt.”
Josh agrees, and also cites the change in overall perspective as part of the reason for change. “More people are comfortable with an Uber, and they don’t need a car or a Zipcar, or more people are comfortable not owning a beach house. They can just Airbnb it, and so that’s really starting to trickle down to rental equipment. Why own an aerator when you can just rent one?”
Keep Up With Technology
Much of the shift in economic focus, and the success of those companies that have really been able to pull off success in the shared economy, is due to technology. In my day (and I am aging myself here) I had an entire wall of CDs. I remember toting around zipper cases of music so I could listen in my car. Now there’s simply no need. We all walk around with devices in our pockets that allow access to libraries of thousands upon thousands of books, songs, and movies. The need to collect things to be a functioning part of society has, quite simply, disappeared into a digital cloud of dust.
The reason Uber and Airbnb are successful is less about adventure and sharing, and much more about the ease, efficiency, and price point under which they function. That couldn’t happen without technology.
Equipment rentals are a highly specialized space, and as such, Nickell Equipment Rental hasn’t been able to utilize technology to the degree that Airbnb and Uber have, but they are always looking for ways they can move in this direction. As I mentioned in last week’s article (add link) technology is one of the key areas you need to focus your market research on, and if you are leaning into the shared economy, this is even more crucial for you.
What Does it Mean for You?
For the consumer, shared technology means expanded access. For clients of Nickell Equipment Rental, it means freedom to pursue a wider variety of work. Says Josh, “It makes them more effective. They can pick and choose any job, and they don’t have to pick and choose jobs that are just focused on the type of equipment they have.”
For you, it means you need to stay on your toes. Do your market research. Be aware of trends. Have a strategy that allows for shifts in the way you approach your consumers. Don’t be afraid to shake up your business model if the time is right. You don’t want to follow in the footsteps of Kodak when digital technology was introduced.
The world is changing faster than ever, and a move towards a shared economy is just one of those changes. Keeping your eyes open will lead you to a strategy that will let you change with the times.