I’ve been thinking a lot about the concept of ownership lately, and in particular how millennials view it compared to any prior generation. In short, it’s not a priority. And that means that a lot of things could change.
The sharing economy was certainly catalyzed by a prolonged recession during which a lot of people found themselves laid off or underemployed, making flexible “gigs” attractive as a way to make ends meet while the economy got back on track. But the entire concept is predicated on the fact that millennials in particular are demanding services and experiences over the ownership of products and assets. This has lots of people in traditional real estate, hospitality, automotive and consumer products industries concerned, and has caught the eye of regulators in nearly every vertical. It’s also changed how we think about the interactions between consumers, producers and the communities and markets in which they interact and transact.
If everyone shares cars and rides from fleets of ever-roaming autonomous vehicles, what happens to the notion of car ownership? Parking lots? Garages? Commutes? City planning? The suburbs?
Chamath Palihapitiya thinks Tesla is positioning itself to drive (sorry) this particular shift as the first “Hardware-as-a-Service” (HaaS) company at scale. He argues that by streamlining the manufacturing and assembly process and constantly improving its software with the millions of data points it collects every hour from its growing number of cars on the road, they will be able to get very good at optimizing everything about the driving experience…at which point they could “simply decide that instead of selling a consumer a car, they can allow that consumer to subscribe to a car — or really, a massive fleet of cars.”
I see this shift having an effect on more than the just consumers of on-demand services or the age at which people will buy a house. A lot of our economy--and capitalism in general--is based on the concept of ownership, particularly when it comes to consumers. Buying (material) things and holding onto them is how the previous generations defined a large part of their lives. From their first home, to their car(s), to myriad consumer products. Even the idea of a “good job” was bought into as something you earned and held onto until you hit a certain age, got a gold watch and flipped the switch to retirement.
Because ownership defined so much of modern people’s lives, the financial services, insurance, healthcare, manufacturing, marketing, and distribution systems that exist today are all designed with ownership at the center. Or perhaps it was the other way around. Either way, we’re already seeing how this shift—enabled by technology—is disrupting some of those systems. A desire for increased flexibility by millennials and future generations has changed demand for goods, services and a certain type of lifestyle. The most valuable asset is now your time.
I think if what Chamath is predicting happens soonish, we’ll see that disruption reach much farther and have much more profound impacts on every aspect of the economy and our daily lives. Exciting times we live in!