Fair Share: A Producers’ stake

 

It’s time to share rewards with those who create value

 

 

 

By Lisa Gansky

 

 

The first wave of collaborative economy companies pioneered new ways to access talent, goods and services. Early companies garnered much visibility and growth. Yet, these first movers were funded by venture capital whose eye is on performance, ultimately leading to a big payday for investors. There is nothing wrong with that approach. I myself have invested in several private companies over the years and have been a beneficiary of the process. That said, in the case of collaborative marketplaces and peer producers, the time has come to align the value created with how it is shared. Business models and governance practices are largely still hanging onto last century’s prevailing themes. Well, we’re moving on.

 

Today, customers and producers are interchangeable.

 

 

In now accepted business models such as eBay or etsy, the platform receives a percentage of each transaction for efficiently connecting buyers and sellers or producers. In the case of many peer to peer marketplaces, the producers rely on the platform to create demand, competitive pricing, expectation management (which in many cases includes liability insurance), a mobile app and website, the ability to track performance, and a compensation mechanism  A win/win, right?  The line between customer and producer is a faint, temporal and flexible one. Anyone can contribute to the growth of your company. What if the most talented people to meet your business’ demands lie outside your firm’s ‘walls’? What if your company’s success depends on the ability to attract and retain the talent, trust and attention of people who will never be employed by you?

 

Patents and Pies

 

What do you get when you mix a major patent portfolio with self-declared inventors seeking to solve problems?  Innovation.  Dr. Garthen Leslie, a retired executive from the U.S. Department of Energy, is the unlikely inventor of Aros, a smart window air conditioner.  Dr. Leslie’s invention was brought to life when he collaborated with Quirky, a new platform that, among other things, marries GE’s patent portfolio with peer problem solvers. Dr. Leslie tapped into that patent portfolio to come up with the core design principles for the Aros. But Quirky goes one step beyond access to patents.  Quirky’s co-ownership model means that Quirky, GE and Dr. Leslie will all share in the proceeds from Aros.

 

 Winner take Some

There is an emerging awareness that business as usual is not a sustainable approach for companies powered by peer-to-peer mechanisms.  The producers – whether drivers, taskers, chefs, crafters or hosts – are generating enormous value for the owners of the platform.  While this is an assumed and somewhat appropriate benefit for the brand, it raises the question of how much is enough and how to distribute value aggregated in relation to value contributed. New models and some old ones are being put to the test. The challenge is defining the value and mechanics for sharing the pie that many are baking together in order to provide more equitable distribution and voice.

 

Tangelos + distributed power

 

Cooperatives have been around for a long time.  And for good reason.  They exist to provide real benefits for their members. Sunkist, a U.S. based cooperative of more than 6,000 citrus farmers, acts as a marketing cooperative. Members benefit from the recognized brand, lobbying power, pooled production and distribution platforms as well as collective bargaining power. This sounds a little bit like Uber, which also provides a recognized brand, marketing and distribution services and lobbying power for its drivers.  

 

But, that’s where the similarities end. Sunkist acts on behalf of its farmer members while Uber primarily acts on behalf of its non-driver shareholders. From Uber’s point of view, their product (a ride) is a commodity to be dynamically priced to meet and drive greater demand.  But from the driver’s point of view, the product is a service performed by an individual who is not an Uber employee. And here’s the rub.  While cars and drivers are plentiful today, the best ones remain in high demand.  Uber and Lyft are famously competing for the best drivers. Much of the focus thus far has been on acquisition of drivers. Both companies aggressively appeal to potential drivers. Uber rents smartphones, pays drivers to join, offers discounted cars to purchase and provides insurance. Yet, acquisition is just the beginning. Retention of skilled producers is and, I predict, will continue to become a bigger concern as drivers seek higher ground.

 

We are at an inflection point.

Power will shift from the platform to the producer. 

 

Resilient brands and marketplaces understand this dynamic. Retaining the high performers is key to success for any business. Meet Gett, a new ‘Uber-like’, on-demand ride sharing service who claims to cater to its drivers by paying them for every minute they are working. Gett is an on-demand, dynamic marketplace that understands that without producers, they have nothing.  So they prioritize drivers’ needs beginning with a compensation ‘floor’. Power is shifting to the hands of the many. How will new platforms be shaped by and for producers? How will resilient early leaders adapt to co-create with their communities?

 

The collaborative economy has generated new ways to create value. The ethos and dynamic of these communities deserve and require us to redesign how value is distributed. Cooperative models are one way forward. For many the appeal of an owner-producer-customer structure is high. Though raising initial capital to fund the platform remains a challenge. Another approach is to build ventures that put the needs of the producers first. Certainly, new twists on old models are fair game. Finally, Quirky’s model shares each baked pie. In the case of the Aros, Dr. Garthen Leslie’s slice came in the form of a $700,000 check. Money isn’t the only currency in play, but, it’s a start.

 

Let’s step up and shape our shared future, together.

 

 

 

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Lisa Gansky is author of "The Mesh: Why the Future of Business is Sharing." Founder of mesh ventures, she’s a serial entrepreneur, author, international speaker and collaborative economy investor who believes that the best return is paradigm shift.

 

 

 

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The Mesh

Why the future of Business is sharing

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