Most of us are familiar with Uber, the on-demand ridesharing service that facilitates one million daily rides. But what is it about the company that’s made us so excited to forget about taxis? According to financial analyst Barbara Gray, Uber’s success grew out of its community-building marketplace structure.
In 2010 Barbara left the corporate world and launched Brady Capital Research to create a firm “for the next generation of investors” that focus on innovative and high-growth companies that are making a positive difference in the world.
In her 188-page book Ubernomics, Barbara presents 6 years of research that suggests the high-value potential of developing marketplaces in today’s economic landscape.
“My thesis is that over the next decade, most companies will either be on a marketplace or build their own marketplace. It’s capital efficient and part of the trend towards access versus ownership.”
The value of creating a marketplace
Marketplaces have the unique capability of defying traditional economics, which is defined as the scientific study of choice under scarcity. Companies like Uber have created a model of abundance, no longer constrained by traditional concepts of supply and demand. This is what Barbara calls ubernomics.
Marketplaces achieve abundance by capitalizing on three recent shifts:
- Technological: access to social networks, apps, smartphones, mobile payments, etc.
- Society: people look for an emotional experience from mission driven companies
- Economy: People need alternative means to earn an income
Dot-com companies from the first generation of e-commerce were based on a one-to-many business model. Marketplace platforms in the next generation of e-commerce are built on a many-to-many business model.
This marketplace model allows sharing/on-demand economy companies to capitalize on more than just a shift in technological abundance, but also on people’s economic need to earn an alternative form of income and their social desire to create a more meaningful life.
The future of business
To achieve success in the ubernomics era, companies will need to create a movement, not just a marketplace. In terms of Joseph Campbell in The Hero's Journey, successful entrepreneurs relish disruption of the status quo and love to turn the Ordinary World into chaos.
In Barbara’s 2015 research report The New Era of Economic Abundance, over a third of the sharing/on-demand economy companies she profiled are composed of such rebels with a cause. As discussed in Chapter 3 of Ubernomics, these companies are not just online marketplaces but movements that promote accessibility, sustainability, and community.
Advice for Entrepreneurs, investors and enterprise brands
In our conversation with Barbara on The Crowd Podcast, we asked where she believes the most attractive opportunities are for entrepreneurs and investors to capitalize on. She suggested putting time and money into:
- Corporate asset sharing: platforms that allow companies to efficiently make use of underutilized, latent or vacant assets.
- Professional services: platforms that can create a long tail of supply in people that have expertise.
She also said that the ultimate goal for enterprise brands should be to familiarize themselves with economic abundance and analyze their own competitive position to come up with a strategy to leverage their own physical capital and access this new value creator.
“Companies can unlock hidden value either by working with sharing/on-demand economy start-ups (i.e., partnering with, strategically investing in, acquiring) or by collaborating with one or more of their corporate stakeholders (e.g., the firm itself, customers, suppliers, partners, competitors) to build their own marketplace.”
Industrial Age brands like General Motors, Ford, and Hyatt are already making strategic moves into the marketplace economy, joining the growing ranks of forward-thinking companies like Amazon, LinkedIn, and Expedia. Although these companies have vastly different business models, they all have one thing in common: they recognize the exciting value creation potential of the new white space of collaboration.
How to get your copy of Ubernomics
Barbara if offering readers of this blog an exclusive discount to her pioneering research until October 31, 2016.