TV, phones, and software as service are just the beginning. In the last few years we’ve gotten hotels as service (Airbnb), tools as service (TechShop), clothes as service (Stitch Fix, Bombfell), and toys as service (Nerd Block, Sparkbox). Just ahead are several hundred new startups trying to figure how to do food as service (FaS). Each has its own approach to giving you a subscription to food, instead of purchases. For example, in one scheme you might not buy specific food products; instead, you get access to the benefits of food you need or want—say, certain levels and qualities of protein, nutrition, cuisine, flavors.
Other possible new service realms: Furniture as service; Health as service; Shelter as service; Vacation as service; School as service.
Of course, in all these you still pay; the difference is the deeper relationship that services encourage and require between the customer and the provider.
Real-Time On Demand
Access is also a way to deliver new things in close to real time. Unless something runs in real time, it does not count. As convenient as taxis are, they are often not real time enough. You usually wait too long for one, including the ones you call. And the cumbersome payment procedure at the end is a hassle. Oh, and they should be cheaper.
Uber, the on-demand taxi service, has disrupted the transportation business because it shifts the time equation. When you order a ride, you don’t need to tell Uber where you are; your phone does that. You don’t have to settle payment at the end; your phone does that. Uber uses the phones of the drivers to locate precisely where they are within inches, so Uber can match a driver closest to you. You can track their arrival to the minute. Anyone who wants to earn some money can drive, so there are often more Uber drivers than taxis, especially during peak demand times. And to make it vastly cheaper (in normal use), if you are willing to share a ride, Uber will match two or three riders going to approximately the same place at the same time to split the fare. These UberPool shared-ride fares might be one quarter the cost of a taxi. Relying on Uber (or its competitors, like Lyft) is a no-brainer.
While Uber is well known, the same on-demand “access” model is disrupting dozens of other industries, one after another. In the past few years thousands of entrepreneurs seeking funding have pitched venture capitalists for an “Uber for X,” where X is any business where customers still have to wait. Examples of X include: three different Uber for flowers (Florist Now, ProFlowers, BloomThat), three Uber for laundry, two Uber for lawn mowing (Mowdo, Lawnly), an Uber for tech support (Geekatoo), an Uber for doctor house calls, and three Uber for legal marijuana delivery (Eaze, Canary, Meadow), plus a hundred more. The promise to customers is that you don’t need a lawn mower or washing machine or to pick up flowers, because someone else will do that for you—on your command, at your convenience, in real time—at a price you can’t refuse. The Uber-like companies can promise this because, instead of owning a building full of employees, they own some software. All the work is outsourced and performed by freelancers (prosumers) ready to work. The job for Uber for X is to coordinate this decentralized work and make it happen in real time. Even Amazon has gotten into the business of matching pros with joes who need home services (Amazon Home Services), from cleaning or setting up equipment to access to goat grazing for lawns.
One reason so much money is flowing into the service frontier is that there are so many more ways to be a service than to be a product. The number of different ways to recast transportation as a service is almost unlimited. Uber is merely one variation. There are dozens more already established, and many more possible. The general approach for entrepreneurs is to unbundle the benefits of transportation (or any X) into separate constituent goods and then recombine them in new ways.
Take transportation as an example. How do you get from point A to point B? Today you can do it in one of eight ways with a vehicle:
1. Buy a car, drive yourself (the default today).
2. Hire a company to drive you to your destination (taxi).
3. Rent a company-owned car, drive yourself (Hertz rental).
4. Hire a peer to drive you to your destination (Uber).
5. Rent a car from a peer, drive yourself (RelayRides).
6. Hire a company to drive you with shared passengers along a fixed route (bus).
7. Hire a peer to drive you with shared passengers to your destination (Lyft Line).
8. Hire a peer to drive you with shared passengers going to a fixed destination (BlaBlaCar).
There are variations upon the variations. Hire the service Shuddle to pick up someone else, like a child at school; some call it an Uber for kids. Sidecar is like Uber, except it runs a reverse auction. You set the price you are willing to pay and let drivers bid to pick you up. There are dozens of emerging companies (like SherpaShare) aimed at serving the drivers instead of riders, helping them manage more than one system and optimizing their routes.
These startups try to exploit inefficiencies in novel ways. They take assets that are unused part-time (such as an empty bedroom, a parked car, unused office space) and match them to people eagerly waiting for them right this second. Employing a distributed network of freelance providers, they can approximate near real-time delivery. Now repeat these same experimental business models in other sectors. Delivery: Let a network of freelancers deliver packages to homes (Uber for FedEx). Design: Let a crowd of designers submit designs, just pay the winner (CrowdSpring). Health care: Coordinate sharing insulin pumps. Real estate: Rent your garage as storage space, or an unused cubicle as office space for a startup (WeWork).
Most of these companies won’t make it, even though the idea will thrive. Decentralized businesses are very easy to start, with low cost of entry. If these innovative business models are proven to work, established companies are ready to adapt. There is no reason a rental car company like Hertz can’t rent freelancers cars, and no reason why taxi companies can’t implement aspects of Uber. But the remixing of benefits will continue to flourish and expand.
Our appetite for the instant is insatiable. The cost of real-time engagement requires massive coordination and degrees of collaboration that were unthinkable a few years ago. Now that most people are equipped with a supercomputer in their pocket, entirely new economic forces are being unleashed. If smartly connected, a crowd of amateurs can be as good as the average solo professional. If smartly connected, the benefits of existing products can be unbundled and remixed in unexpected and delightful ways. If smartly connected, products melt into services that can be accessed continuously. If smartly connected, accessing is the default.
Accessing is not very different from renting. In a rent relationship the renter enjoys many of the benefits of ownership, but without the need for an expensive capital purchase or upkeep. Of course, renters are disadvantaged as well because they may not gain all the benefits of traditional ownership, such as rights of modification, long-term access, or gains in value. The invention of renting was not far behind the invention of property, and today you can rent almost anything. How about women’s handbags? Top-of-the-line brand-name handbags sell for $500 or more. Since bags are often matched to outfits or seasonal fashions, a selection of fancy bags can get expensive real quick, so a sizable bag rental business has emerged. Rentals start around $50 per week, depending on the bag’s demand. As expected, apps and coordination make renting smoother, more effortless. Renting thrives because, for many uses, it is better than owning. Bags can be swapped to match outfits, returned so one does not need to store them. For short-term uses, sharing ownership makes sense. And for many of the things we will use in the upcoming world, short-term use will be the norm. As more items are invented and manufactured—while the total number of hours in a day to enjoy them remains fixed—we spend less and less time per item. In other words, the long-term trend in our modern lives is that most goods and services will be short-term use. Therefore most goods and services are candidates for rental and sharing.