The Sharing Economy Mark Suster
@msuster LeWeb London, June 2013

What new can a VC
really tell you? 1 After 2 days of the sharing economy

2 I thought I’d give
some context to  Why sharing / collaborative consumption?  Why now?  What next?

Prices 3 Network Drivers of
our Future World Economics  Un / under- employment  Debt  Globalization  Scarce Resources  Transparency  Demographic Shifts

1. Prices
4

5 The common theme of
the biggest Internet successes has been “deflation”

6 Biggest Internet players “disrupted”
incumbents on price

7 Disruptive Technologies are 2
Less Functionality / Performance 3 Lower Margins See “Innovator’s Dilemma - Clayton Christensen 1 Significantly Lower Prices

8 Disruptive companies offer LESS
functionality & compete with “non consumption” See: http://www.bothsidesofthetable.com/2011/12/22/the-amazing-power-of-deflationary-economics-for-startups/

It’s why the TV industry
still can’t get its head around 9  1 billion monthly uniques  4 billion hours  > 150 videos watched / year for every human

10  3.4 billion video
views / month  > 25,000 video creators  250 million subscribers  80% audience 13-34  40% mobile

2. Network
11

Of course we now know
that 1/3rd of world is now online 12Sources: U.S. Bureau of the Census, World Bank 44 411 1,019 2,019 2,291 1995 2000 2005 2010 2012 World Internet users (M)

13 And per Mary Meeker’s
slides we know the audience (& opportunity) is now global

14 In just 4 years
71% of the world’s literate population will have a smart phone Source: Benedict Evans (http://www.slideshare.net/bge20/2013-05-bea)

15 Incumbents simply find it
too hard give up juicy margins NetworkPrices / Margin Startups should focus on non-consumption & they will find it hard to compete

16
3. Economics

17 Student debt in US
along = $1 trillion. $100 million new / year. 2x rate of 10 years ago.

18Source: the Atlantic: http://www.theatlantic.com/business/archive/2012/10/europes-most-tragic-graph-greek-youth-unemployment-hits-55/263118/ We
are risking an entire generation who don’t get on the career ladder

19 The sharing economy isn’t
new. It’s just more urgent  Un / under-employment  Debt  Globalization  Scarce Resources  Transparency  Demographics And it’s not going away

20 Trade Guilds Wage Protection
/ Limited Supply Top down organization struggling to keep up with innovation or needs of the people Universities High-Paid Jobs Government Taxation, Cu rrency

When governments can no longer
properly look after their people, people will look for themselves Capitalism. 21

In the past forced migrations
were the only answer * 22 Increasingly IT- enabled people can tap into global demand networks * We are of course seeing a world of digital have’s and have-not’s. Mobile phones bridge this gap. Who will develop services for the worlds poorest?

23 Thomas Friedman said it
best some of world’s most talented people live in economies that can’t pay them a “global market price”

The sharing economy will have
new “market-makers” Will they all be benevolent in the future? Market forces, transparency & new disruptions must keep them in check 24

25 Radio. Television. Telephony. Twitter.
It’s the natural extension to a global, transparent world. Open = empowered. But also aware. And disenfranchised.

Of course all of this
open data can be mined in real time. For business. And government. For marketplaces this can help with trust, authority, safety, marketing, & planning. Note: I’m a proud investor in DataSift

27 1. THE ECONOMICS OF
“GLOBAL”

Comparatively richer countries want to
tap into enormous pool of intelligent resources in countries with lower wages 28

Some of the world’s most
talented film maker’s can’t just relocate to Los Angeles 29

30 Artists struggling to earn
a global wage suddenly find demand at higher prices  30 million registered users  65 million month uniques  2.5 billion monthly page views

31
2. EMPOWERING THE
UNDER-EMPLOYED

With large underemployment people can
earn extra $$ staying at home, while satisfying demand to avoid kennels. 32

And this is true of
many of the peer-to-peer marketplaces. 33

34 3. MOVE FROM HIERARCHIC
TO FLAT STRUCTURES

35 Lending Club now so
widely accepted even used by hedge funds to invest directly in consumer loans

36 And of course startups
can now more easily tap into pools of angel investors directly

37
3. REMOVING
PHYSICAL
BOUNDARIES

By removing physical boundaries you
create win-win opportunities for both instructors & students 38 Example Industries:  Education  Music Lessons  Personal Trainers  Psychologists

39 4. EFFICIENCY GAINS IN
EXISTING MARKETS

Many of these markets exist,
the Internet is just making them much more efficient 40

So What’s Next?
41

42 HELPING BUSINESSES TAP INTO
PEER NETWORKS

Entrepreneurs often start with consumer
ideas. Helping enterprise tap into peer networks may prove even larger 43

44 Recap – in a
world of economic challenges & large networks … the “sharing economy” will thrive. Will you find your place in it?

The Sharing Economy Thank you!
Mark Suster - @msuster LeWeb, June 2013