Despite unprecedented turbulence, the co-economy continues to blossom, redefining work, rest and play, transforming how we will drive profit, define “value” and unlock opportunity in the future.
It has been a turbulent year for the co-economy (co-living, co-working, co-sharing, co-leasing and co-culture). In 2019, co-economy brands like Airbnb were riding high – the property rental company had a valuation of USD 31 billion and enough cash for a private listing. But in 2020 the coronavirus pandemic took hold, the biggest disruption to the travel industry since the 9/11 terrorist attacks.
By summer, the outlook for the co-economy wasn’t good, with public spaces turned into no-go zones, travel bookings decimated and much of the world forced to retreat inside. But while many assumed that the arrival of the coronavirus pandemic would herald an end to the co-economy – who wants to share something that might have been sneezed on? – it is flourishing once again, with a swift recovery illustrating the enduring appeal, resilience and potential of co-economy brands.
From sharing economy to co-economy
In the 2010s a new kind of company emerged. Entrepreneurs observed untapped commercial potential in underused assets, from gardening equipment and boats to car parking spaces and pets. In this fledgling sharing economy, digital platforms connected those who wanted to hire or borrow things with those who wanted to rent them out. “Access versus Ownership” became the rallying cry of a generation of consumers who were sick of buying things they didn’t need or seldom used. But the principles of sharing culture have now broadened and evolved into the co-economy, where society’s penchant for sharing is pervasive.
The evidence is everywhere: consider how co-working spaces like WeWork, rentable by the day or month have – for many companies – replaced the need for a full-time office. Or how architects such as Foster + Partners and Carlo Ratti are experimenting with models of co-living with social cohesion designed in. Or how prestige items such as luxury clothes (Rent the Runway), furniture (Harth) and works of art (Rise Art) are being rented and leased by consumers mindful of the environment as well as their wallets.
Co-economy growth areas
While initially threatening its existence, the fallout from the coronavirus pandemic has provided the co-economy with new areas for growth. Hemmed-in city workers are spilling out of towns to work remotely from far-flung locations, while organizations continue to embrace digital. Innovators are now using co-economy principles to roll out new offerings that address these changes.
Education is one case in point. In an era when students are becoming accustomed to remote studying, education is becoming dispersed and collaborative. Students inspired by TikTok’s Hype House, a space where TikTok influencers would gather to make videos, are renting large “collab houses” with friends and doing school remotely, together.
Meanwhile, new virtual schools like Wingu Academy are emerging, with the remote learning platform providing educational support and interactive online content to schools and home-schoolers all over Africa.
As global travel stalls, we’ve also seen the rise of a more localized and sustainable hospitality market. Human Hotel, a new co-economy platform, allows users to find not just a room, but a specific host based on their interests. “We started to see consumers requesting not destinations but people,” says co-founder, Martin Rosengaard. “It was less about physical travel and more about wanting some sort of transformative experience. It’s about moving shorter distances.”
But perhaps most significant is the shift to remote work. According to a study by the New York Times and Morning Consult, one in three Americans would relocate if remote work continued indefinitely, creating new hinterlands of opportunity for co-economy concepts beyond the city limits. This can provide a vital reboot to regions that have suffered brain drain into cities and help unlock the digital potential of rural areas – in the UK alone, this development could add up to USD 34 billion to the economy annually, according to Rural England.
In the future, remote workers will be able to eschew location permanence in favor of traveling the world – Barbados, Bermuda and Estonia already offer remote workers visa-free stays or specific remote work visas – relying on the co-economy, from co-living spaces to clothing rental, as they work, rest and play in different locations.
These concepts represent a new idealistic form of consumption – one driven by principles of community and sustainability. But the co-economy has also drawn criticism in recent years, with some saying that this new way of doing business is a form of hyper-capitalism where overheads are cut and workers disenfranchised. Such criticism should be kept front of mind and safeguards communicated to consumers, ensuring the co-economy can harness these new growth areas and continue to blossom.
- Co-economy resilience: Uber owns no cabs. Airbnb owns no hotels and Amazon owns no physical shops. This lack of overheads means these brands are well insulated against the turbulence of 2020. They are lean and, hence, more profitable.
- Cult of ownership: Owning things makes you successful? Not anymore. The cult of ownership is receding as consumers look for experiences, education and things they can ‘get’ rather than things they can ‘have’.
- Exurbia rising: Remote work is giving birth to new zones and hinterlands of opportunity in between the city and the countryside. Co-economy concepts will become more widely distributed, helping to reboot once-overlooked regions.
- Conscientiousness counts: Co-economy brands have drawn criticism for exploiting workers (Uber), skirting regulations (Airbnb) and encouraging a reputation economy which nudges people to score each other (the more strident critics say this is spying). These qualities are increasingly jarring with today’s morally outraged consumers.